A Q&A with Ms. Fe Perez-Agudo

Ma. Fe Perez-Agudo—“FPA” to her colleagues and staff—has had one of the most profound and lasting effects on the Philippine car industry. Easily one of the most influential figures in the highest echelons of an intensely competitive sector, Agudo built the Hyundai car brand from a rank newcomer to one of the industry’s powerhouses. She also founded and has been leading the Association of Vehicle Importers and Distributors (AVID) for over 20 years. 

Today, she is poised to consolidate the bullishness in the commercial vehicle segment with Hyundai Trucks and Buses while performing the same marketing wizardry she employed for Hyundai to another upstart brand in Changan Auto.

We reached out to FPA to hear her words of wisdom regarding the Philippine car industry as a whole and her plans for the CV and PC brands under her wings.  

Please comment on the state of the Philippine automotive industry in 2022. Were there things that surprised you about it, and what challenges did you see?

The full year of 2022 was seen as a prelude to the automotive industry’s anticipated comeback after its brief setback during the pandemic. Surprisingly, we saw a semblance of “revenge spending” despite the pervading sentiment of caution in the Filipino car buying public.

Total industry sales nearly reached 370,000 by the end of 2022, or at least 26% growth from 2021. While the PC and CV segment posted a 2% dip with 87,000 units and 10,000 units respectively, the LCV segment led the industry surge with 40% growth to 270,000 units. Barring any unforeseen circumstances, full-swing industry recovery is expected this year. We expect double digit growth to around 410,000 units, driven by the LCV segment.

We are looking at hitting pre-pandemic levels by the end of 2023. And with government taking active steps to create a competitive environment for electric vehicles, prospects for our entry into a new era of sustainable mobility are bright.

There is still the issue about the continued supply chain hurdles and chip shortage. How did they impact the business in terms of sales? Were there, on the whole, units on the showroom floor for those who wanted them?

Global semiconductor, electrical and steel shortages will continue, forcing automakers to limit production and pivot from long-time assumptions, such as lean inventories and just-in-time manufacturing. So we have stopped worrying about what cannot change and focus on what we can, which is customer experience. Manage client expectations properly. Be transparent. Do not overpromise. Keep an open and truthful conversation with the customer.

Customer engagement in this post-pandemic transition period poses both a challenge and an opportunity. With consumers still careful and limited in their spending habits, it is crucial for us in the industry to understand and to be a step ahead in giving customers what they need and want. Acquiring quick, timely, and relevant insights from customer-based data coupled with advanced planning tools can provide a more agile and effective read of customer behavior.

For AVID, what’s the industry outlook for 2023? When can we realize pre-COVID numbers and sustain them?

Philippine GDP grew by 7.6% in 2022, exceeding the government’s target of 6.5-7.5%, and stronger than the previous year’s 5.7% expansion. We expect industry sales to hit pre-pandemic levels at 410,000 units by the end of 2023.

What are the difficulties that can still hound the sector? What are the key factors that you think will bring in more growth?

Automotive players will be pivotal in determining the right mix of products and services that would appeal to the buying public. Prospects are bright but much of the industry’s success will depend on the economic climate and the policies and commercial agenda that the current administration will be pushing to address current and ongoing challenges: inflation rate which shot up to a nearly 14-year high of 8.1% in December due to global shocks and gaps in domestic policies (average inflation rate is at 5.8%); skyrocketing prices of oil and basic commodities;

rising interest rates; a weak peso versus the US dollar; rising costs of production due to increasing global crude oil prices; conservative lending of private banks owing to high interest rates and great risk exposure due to the pandemic; supply constraints due to continuous lockdowns in key global markets; and geopolitical issues that affect the global supply chain.

Yes, we are on the road to recovery given the robust domestic demand. But to sustain the upward trend, we need deliberate and prudent economic management to address external threats.

When you brought back Changan in the Philippines, you said that it was a time for a challenger brand. How is Changan doing these days, and what sort of lessons have you learned since the brand’s return?

All I can say is that Changan Auto is living up to its name as a challenger brand. We opened 2023 with 221% growth, having achieved 100% of our sales targets, driven by the new CS35 Plus and the Alsvin sedan. 

We started 2022 strong and ended the year on an even stronger note, thanks to the collective efforts of team Changan and our nationwide dealership network, backed by Changan International Corporation, our local business partners, and the growing number of believers in the brand. We launched the new CS35 Plus in the first quarter of 2022 at the Manila International Auto Show. (Get ready for more at MIAS 2023!) The fourth quarter gave the public a sneak preview of what Changan Auto has in store for 2023: the new CS55 Plus, launched in November 2022, and the Uni crossovers, the Uni T and the Uni K, launched in December 2022.

We inaugurated our home base, the Changan National Headquarters on December 2, 2022 at the Auto Resources Center in Calamba City. The national headquarters is key to advancing Changan brand presence in the country as it will serve as the training hub and nerve center for the nationwide expansion of the Changan dealership network.

How is the market reception for Changan and why do you think that is? Is the “made in China” stigma still in play?

People generally are suspicious and even fear what they do not know. But the fact is China is recognized as an emerging powerhouse in the automotive industry. Local and international motoring experts are observing how China auto brands are getting so much better in quality and in tech offerings.

What are the major opportunities in the current market for Changan to capitalize on?

The entry of a new player, like Changan, opens better options and a wider range of product choices to the Filipino. We see Changan as a viable option in terms of quality and price points. We already have penetrated an enthusiastic new niche market of “converts” seeking handsome, value-laden, tech-forward cars that do not break the bank. And their numbers are growing.

The traditional car dealer business has changed to one wherein a few big dealer groups handle several car brands. How is this affecting the overall marketing of car brands? What challenges and opportunities does this present?

It is sound business practice to be a multi-brand dealership. That is the spirit of healthy competition through which we please consumers and protect their interests by offering a wide selection of products that meet a wide variety of needs, tastes, and budgets. Our dealer principals are veterans who have made a name for themselves by carrying several brands that cater to various markets. At the end of it, the automotive market relies greatly on scale of business. The challenge, however is to differentiate and customize our marketing and communications campaigns to appeal to our target markets. 

Commercial vehicle sales have been continuously strong. What are the opportunities for growth today and how does Hyundai Trucks and Buses intend to capitalize on these?

You cannot drive the economy further up without efficient people movers and the all-important maintenance and parts services so that they continue to be excellent movers for growth. A smart-thinking entrepreneur will want to invest in haulers that will serve them for years and years ahead. So, price is important but it is not the only thing that matters. How about versatility, power, and fuel efficiency? These are considerations that Hyundai Trucks and Buses Philippines commit to deliver.

Look: our HD45 GT four-wheeler has the power, space, toughness, and versatility to serve as a dropside or aluminum van. And its power takeoff (PTO) feature gives it the edge of not just being an efficient mover of goods, but also as a power source for equipment like hydraulic pumps, generators, air compressors, pneumatic blowers, or vacuum pumps at work sites. Not all trucks have that as a standard. And to top it off, the HD 45 GT weighs 4,490 kg, which exempts it from the Truck Ban. So that spells continuous business without worrying about beating the truck ban schedule. 

Look also at our newly introduced, boosted Hyundai County New Breeze. Since it was first introduced to the market in 2016, the County has built its name as a leader in the bus segment with average sales of around 800 in the past six years or an average of 136 units a year. With its upgraded features—a longer body, expanded seating capacity, generous and relaxing space and amenities, driver-friendly ergonomic cockpit, impeccable safety standards, and powerful, dependable road performance, we are confident about drawing in a new market for high-performing shuttles in the business, government, tourism, and education sectors.

Do you still believe in a “phygital” business model? What’s the ideal balance between brick-and-mortar showrooms vis-a-vis digital tools?

If there is one thing about COVID-19, it forced us to quickly shift business models. We certainly had birth pains, learning and adapting to the new technology and unlearning outmoded practices but, in the end, we saw how going digital has made sales and after sales transactions easier and more convenient, both for our dealers and our customers, who are practically online 24/7. Phygital is here to stay and to get better each time, having seamlessly blended the physical and digital spaces to enhance the customer experience. We are constantly discovering and learning new things as we go along.

Can you please discuss the restructuring of Hyundai into separate companies focused on passenger cars and CVs and what it means for the brand in general?

The operations of Hariphil Asia Resources, Inc. (HARI) and CMPI are independent of each other and are addressing the needs of two distinct markets. Each brand is taking two different paths which, in the end, favor the Philippine motoring public because they are given more options and support in our shared drive toward a better future—HARI commercial vehicles cater to SMEs, large-scale commercial, industrial, and B2B accounts, and CMPI, a new market for innovative, value-laden passenger cars. – Kap Maceda Aguila

Most Popular


More Articles Like This