The Philippine auto industry continued to grow in 2012, on target to breach 200,000 units of brand new vehicles. Philippine car buyers enjoyed a healthy slate of new models, with multiple launches nearly every month of the year. The year was neatly bookended with the launch of an American icon, and the return of a Japanese economy model. Here are five highlights of the Philippine automotive industry in 2012:
Small is beautiful
There’s an adage in the car industry that there’s no money to be made in small vehicles, but no one seems to have told that to Mitsubishi, Hyundai, and Chevrolet. The three brands spearheaded the move to smaller passenger cars, notably hatchbacks, in the guise of the Mirage, Eon and Spark. All have found an audience of first-time car buyers, as well as fleet accounts. The Mirage in particular has been a success, reportedly grabbing more than 1000-unit sales mere days after its launch.
Running cost is no doubt behind the shift to small vehicles, but it’s also in the jump in quality of these cars. No longer does buying the entry-level hatchback mean buying a twenty-year old design and outdated technology. The Spark was designed for world markets, including North America; the Eon, for the burgeoning Indian demand; and the Mirage is being sold in Japan and Asean as part of a new breed of economical-to-run vehicles.
The cars themselves feel more substantial and safer, thanks to more effort put into chassis design. The exterior look aims for a sportier, spunkier feel rather than a forgettable wrapper. Interior appointments are less Spartan, with more consideration to comfort and a quieter experience. Driving these mini-cars is no longer a form of punishment, and can even provide a modicum of entertainment.
Rise of the sports cars
Economy is all well and good, but we still need cars that teenagers can put up on their bedroom walls, and adults can use as wallpaper for their computer screens. 2012 was the year of the sports car, in one important way-affordability. Automakers brought out a gaggle of models that are within reach of anyone in the market for an executive car. Ford officially launched the Mustang, in both V6 and V8 variants, to the delight of enthusiasts. Toyota shot the 86 sports car out onto the racetrack and into showrooms. The lightweight two-door met every wild expectation, and then some, never mind that some enterprising salesmen loaded the early cars with expensive “options” for buyers who couldn’t wait to take delivery. Next door is the BRZ, the 86’s twin-both cars were engineered and are built by Subaru. Hyundai beefed up its still-formidable Genesis Coupe by giving the base model more horsepower, and an available eight-speed automatic transmission, as well as a prettier face. Peugeot wisely included a sports car in its launch lineup; the RCZ is as stylish as a perfectly worn miniskirt.
Even sedans and hatchbacks showed their sportier side. BMW launched the fire-breathing all-new M5 at the Manila International Auto Show as the centerpiece of its all M display. Hyundai introduced the Veloster as an interesting take on the sporty front-wheel drive hatchback. It features a single door on the driver side, but both front and rear doors on the passenger side. Even Honda’s lineup featured the hybrid spiced up with a bit of sporty character, the CR-Z coupe.
After years of reliably boring cars, market leader Toyota is steering its models toward being more fun to drive, at the behest of its CEO Akio Toyoda. He sees the new direction as essential to the company’s salvation, and we heartily agree. With Toyota heading in that direction, the rest of the Japanese cars will likely follow to some degree, as will many other competitors.
Smarter is better
As electronics become more affordable thanks to Moore’s Law, cars are more and more becoming rolling computer platforms. Technology previously reserved for top-of-the-line luxury models are cascading down to economy cars. The best embodiment of this is the Ford Focus. The hatchback can steer itself into a parallel-parking space, and is safer and better to drive because of torque vectoring technology. The drivetrain actively diverts torque to the side needed to maintain the driver’s desired course. ABS brakes and electronic stability control are becoming standard on more models.
Nowhere is the advance in electronics more apparent than in automotive interiors, with climate control and connected audio debuting even on entry-level cars. Although there is still the odd new model where iPod compatibility means merely having an aux socket, many car audio head units can now dock with one’s music player. The Nissan Navara Tech Xtreme pickup is notable for being one of the first vehicles with a built-in wifi router. One merely needs to plug in a broadband dongle for the entire vehicle to become a wifi hotspot.
More km per liter
Squeezing more mileage from each drop of fuel has been top of the list for all carmakers in 2012. Mazda debuted its SkyActiv technology set, which includes high-compression gasoline engines that improve fuel economy by 15 pewrcent. Subaru introduced a new two-liter boxer engine and CVT combination that boosts mileage of the new Impreza and XV models not just a smidgeon, but by 30 percent.
Start-stop technology is being featured in more new models, including BMW’s new X3 and the upcoming Toyota RAV4. One are still largely unexplored is diesel power for passenger vehicles. Hyundai has introduced diesel versions of nearly all its models, but an oil-burning Elantra and Sonata are still not available. Roaring into the market with diesel engines in all of its cars save the RCZ, Peugeot is carving out a niche with MPVs and executive sedans taking advantage of diesel’s cheaper cost and higher mileage. The other partner in fuel economy, the transmission, has also seen improvements. Gearboxes with six speeds, or a CVT are the minimum standard; any new model that is being sold with a four-speed automatic transmission is already at a disadvantage.
One victim of the impetus for fuel efficiency is the large-displacement engine. Smaller powerplants that use turbocharging are taking the place of the big blocks. The Ford Explorer has seen its massive V6 engine outshone by the upstart Ecoboost two-liter turbo four-cylinder, an engine that may very well be the standard engine in the next Mustang. The earthshaking BMW V10 in the M5 has been replaced with a twin-turbocharged V8, with notable improvements in power, torque, fuel economy and emissions. The six-cylinder engine of the 5 series has been replaced in the lower variants with a two-liter turbocharged four cylinder. Subaru has a two-liter turbocharged boxer with the power of a large V6 on the way in the new Forester. The only ones that will be complaining will be our spines and our ears, which will badly miss the unmistakable sound of a straight-six on full song.
Imports and the death of Philippine auto manufacturing
The news was not entirely unexpected, but the industry was nevertheless shaken to the core with Ford’s announcement of the closure of its assembly plant in 2013. The plant was the only one to ever have exported substantial numbers of completely-built unit vehicles, such as the Escape and Mazda3. 80,000 units and a billion dollars in export value were quite an achievement. The reason for the closure is the complete lack of direction for the development of Philippine auto manufacturing. Countries with a large domestic demand, such as Thailand and Indonesia have an inherent manufacturing advantage. Successful with its goal to become the Detroit of Asia with its pickup program, Thailand is now moving on to eco-cars, with the goal of exporting cars to other countries. The Mitsubishi Mirage is one such eco-car model.
The free trade agreements currently in place within ASEAN and with Japan favor importation of cars rather than local assembly, as our rival nations already have economy of scale in their favor. Thus the direction is to merely import and sell cars rather than assemble them here.
Is this important? Perhaps not to the average buyer. The consumer will see the huge choice of models currently available in the local market, with many at competitive prices, and will conclude that importation is the way to go; never mind that they’re not made here.
Yet car assembly and manufacturing are absolutely essential to our economy. Developing auto manufacturing enhances many related industries-steel, plastics, glass, electronics, rubber, and packaging. It’s no accident that so many well-manufactured products, from die-cast scale models to properly-packaged fish sauce are now coming out of Thailand. The auto industry has had a direct hand in improving their industrial capability.
As interviewed by PDI’s Aida Sevilla-Mendoza a few weeks ago, Ford Group Philippines chairman Henry Co expressed his view: “With 95 million people-we are globally ranked 13th in terms of population-can we provide enough jobs with our current portfolio of industries? BPO (business process outsourcing), tourism, agriculture, construction, mining and others. If yes, then name me a developed country of similar scale that does not have a strong manufacturing industry. There is none. If you agree that we need a manufacturing industry, give me an example of a developed country with a strong manufacturing sector that did not use the motor industry to develop. There is also none. It is therefore not about whether we have a chance, it’s about whether we have a choice.”
Lack of political will to close the back doors to second-hand importation of used cars is one factor. Lack of direction for the industry, poor infrastructure, and prevalent red tape are all obstacles to development.
There are still plenty of bright spots. The most popular models-Toyota Vios and Innova, Honda City, and notably the upcoming Nissan Almera-continue to be assembled in the country. But they are becoming a minority. The few remaining auto plants are in danger of closing down, taking away valuable jobs, technology, and opportunity for development. We must advance the auto assembly industry now, while it is still alive. Bringing back the dead, despite what you might see on TV, will be all but impossible.