The Philippine Automotive Dealers Association (PADA) has made an urgent appeal to the Department of Trade and Industry (DTI) to allow them to re-open on a skeletal workforce basis by this week for aftersales service and parts sales.
In a letter addressed to DTI Secretary Ramon Lopez, PADA believes that automotive dealerships and service centers should be classified as essential services, particularly for vehicle repair and sale of spare parts. PADA’s dealer members say they have been receiving calls for emergency car repairs particularly from frontliners. However due to the guidelines set in the Enhanced Community Quarantine (ECQ), they’ve had to decline these repair requests.
PADA’s request to the DTI echoes a move in the U.S. where its auto retailers were re-classified as “essential workers,” by the federal government in light of the COVID-19 pandemic.
There, essential workers now include, “workers critical to the manufacturing, distribution, sales, rental, leasing, repair and maintenance of vehicles and other transportation equipment.” This is to help other essential workers such as medical front liners to travel continually.
But more than just providing a service to front liners, PADA also paints a very grim picture of what auto dealerships face during the COVID-19 pandemic.
After the Taal Volcano ash fall last January, the ECQ also ground vehicle sales to a halt. With that, Fitch Solutions has revised its full year sales projection for new car sales in the Philippines. From an earlier growth projection of 7.4 percent, the global market insights company is now saying that sales will grow by a measly 0.4 percent.
Meanwhile, PADA says some dealers will face significant liquidity issues in the short- and medium-term; some may even run out of cash “within a matter of weeks.”
And while the DTI moved to suspend the collection of rent during the period of ECQ under Memorandum Circular 20-12, PADA says it doesn’t cover car dealerships because they’re been classified as Large Enterprises, and are automatically disqualified to avail of DTI’s concessions on commercial rent. Rent, along with equipment forms a large chunk of a dealership’s fixed costs says PADA — as much as 70 percent of their gross profit in some cases.
For PADA’s part, they’re appealing to the DTI to allow them to re-open on “by appointment” and “limited” engagement for aftersales service and parts sales with the following conditions:
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