The Automotive Industry and COVID-19: What’s Next?

“If you are going through hell, keep going!” said England’s Prime Minister Winston Churchill.

Quoting a war leader in these tough times may not be the most ideal thing to do, but we are indeed in a war – a war against a viral pandemic that currently affects the global economy.

In the U.S. alone, the country’s central bank adjusted its target range for the federal funds rate to 0% – 0.25% to support its economy. This is a polar opposite of what the U.S. has been experiencing six months ago, with strong wage growth and unemployment at a 50-year low.

Yes, the novel coronavirus, or formally known as COVID-19, may have originated from a small, commercially adept province in China, but the spread of the disease is on a global scale – and that will surely go down in the history books.

We can’t deny that a lot of people are going through hellish situations right now – including the entire automotive industry. Several car marques have announced a suspension of production. Brands under the FCA group are pushing for a two-week manufacturing holiday to mitigate the spread of COVID-19, while the Volkswagen Group has completely suspended European operations for the same period of time. 

In the Philippines, President Rodrigo Duterte has announced an “enhanced community quarantine” for the entirety of Luzon, the country’s biggest island. This, of course, includes Metro Manila, which houses the majority of the country’s economic hubs, car companies included.

The enhanced community quarantine, among several other guidelines, mitigates the spread of the virus by implementing strict home quarantine. This involves, but is not limited to, suspension of public transport systems, closure of malls, and work-from-home arrangements for private business operations.

Enhanced Community Quarantine’s effect on car businesses

With the enhanced community quarantine in place, car companies are forced to halt operations or at least enforce a work-from-home arrangement, both in their main offices and in the dealerships. Several car brands have already announced this move on their social media channels. A number of car launches were canceled, which includes the hottest cars that should have entered the market this year: the Mitsubishi Xpander Cross, Ford Everest Sport, and the Suzuki XL7 and S-Presso.

This year’s Manila International Motor Show, which could have been a cesspool of car launches for the Filipino car buyer, has also been postponed to a later date.

Because of this, expect a substantial slow down in car sales in March and April of this year – until the COVID-19 situation improves. Without the physical presence of vehicles in mall displays and showrooms, vehicle marketing would be a challenge for these car companies. Test drives, of course, won’t be an option.

Interest in cars will also be affected in the months to come. It can go either way – the dangers of public transportation could increase a Filipino’s interest in buying a car, but at the same time, the average Filipino might think twice before considering a car purchase since there are more critical and essential items at the top of the shopping list.

What will happen next?

With the manufacturing and supply chain at a halt, concluding that the industry will freeze isn’t rocket science. Worse, this will trickle down to the local dealers, which currently, at best, are resolving to online marketing tactics because of the strict government regulations.

I have reached out to several brands about their business and marketing strategies amid this global emergency, but only a few returned with a concrete plan as of this writing. Subaru Philippines is pushing for an online campaign right now, educating people about its products through the internet. That’s a smart move, considering that many people will be using the interwebs as a source of information. I’m expecting the rest to follow suit.

But this strategy will only be effective to some extent. We also need to consider that COVID-19-related news will flood news channels and social media newsfeeds, so internet space would be crowded. Then again, that’s better than nothing at all.

As Churchill said, we should all keep going even during hellish times. I believe that the car business and Filipinos, in general, will be able to soldier on through these tough times and the market will recover from the deep abyss it’s currently in right now. We can only hope for the best and we, as a nation, should work together and show the resilience that we are known for.

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