Economic pessimism takes toll on car sales

CEBU, Philippines - The shortage of supply from car manufacturers that were affected by the highly publicized economic pessimism has dampened the supposedly upbeat take up of car units in the Cebu market.

The Car Dealers Association of Cebu reported a good performance of brand-new car buying in Cebu, but the problem is dealers are running out of supply, said the association’s president Jose Manuel Cuenco.

 Cuenco, who is the general manager of Toyota Cebu, said that while the national industry projection is zero growth for 2008 and 2009, Toyota Cebu on the other hand grew by five to 10 percent in the first quarter of this year.

He believes that Toyota’s performance here is also similar to other car brand dealers, but growth is hindered by limited supply provided for by the national car dealers or manufacturers abroad.

The economic crisis he said has failed to affect the appetite of consumers in Cebu to buy cars, the five percent to 10 percent growth in the quarter could go higher, if there were enough car units available for the market, he said.

According to Cuenco, the problem is the pessimism of national companies, which anticipated the zero growth projection this year because of the global recession, thereby the production of cars, and inventory in the market has shrunk.

In Cebu, he said demand for vehicle purchase is encouraging. The market is looking for newer models, and brand new units, although the movement is from wide cars or big engines preference to smaller engine and fuel efficient units.

Car buyers are still dominated by passenger cars (individual usage), commercial (taxi) and corporate accounts—like those companies that needed new vehicles for their operations.

Despite the pressure to cut cost among companies, Cuenco said vehicle requirement for companies is still one of the top priorities thus demand for vehicles among corporations, which usually buy more than two units, is still strong.

There is also a strong demand from the middle-range market, such as those executives and monthly earners, specifically that car dealers in partnership with banks are now more active in pushing car loans among the middle-income market segment.

In a separate interview, Visayas Second Row Corporation the dealer of Chinese car brand Chery car, posted 30 percent increase of sales performance in April this year.

Raymund Basubas, Chery Cebu dealership marketing director confirmed Cuenco’s statement saying the Cebu market for car purchase seems not to be affected by the “hype” of economic difficulties.

This time and age, owning a car is no longer a luxury for an individual, but it already becomes a “necessity” for every family. Basubas said the in-expensive cost of Chery cars and easy access to financing has become a fighting tool of the brand to stay brisk amid the economic turmoil.

While the Car Dealers Association of the Philippines, earlier reported a slow performance of car sales in the country, Cuenco said Cebu could make a robust growth all year-round if supply is enough.