Isuzu Philippines Corp. is bracing for a slight dip in its sales target for 2009 because of the global crisis, which is also bringing about shifts in strategy to boost its maintenance and repairs services, a top executive said.
At the same, Isuzu also has to deal with imported surplus trucks that are hurting sales of its assembled truck line up in the Philippines.
Keiji Takeda, Isuzu Philippines president, told a roundtable at The Manila Times on Friday that the company this year expects to sell only about 9,000 units. That is lower than its total sales of 10,101 in 2008.
“Last year was a good year,” he said, adding that it was the first time in four years that the company exceeded the 10,000 unit-sales mark.
Isuzu Philippines last year as well posted a 3.3-percent year-on-year sales growth, and was the fifth-largest seller as it cornered an 8.1-percent share of total local auto industry sales, joint Chamber of Automotive Manufacturers of the Philippines (CAMPI) and Truck Manufacturers Association (TMA) data showed.
But Takeda said Isuzu Philippines’ sales during the early part of this year were “not so good.”
According to the latest manufacturers’ report released early this month, Isuzu Philippines has sold 1,134 units in the first two months of this year, down 18.7 percent compared with sales of 1,394 in the same period last year. This, even if the company’s sales of 667 units in February, was 42.8-percent higher than January’s 467.
Takeda added that CAMPI’s 2009 total sales target of 130,000 vehicles might not be met. He said the local automotive industry might sell only about 110,000 units this year.
Despite this, Takeda said the company maintains optimism that its sales target would be attained. “Sales of 9,000 units this year will still be good for us.”
Takeda maintained that amid the crunch, Isuzu Philippines would not resort to laying off its 560 workers.
“Downsizing [the workforce] is the last option,” he said. “I believe we have so many other options [remaining].”
But Takeda said the global crisis and slower sales was indeed affecting the company’s operations, prompting it to implement cost-cutting measures. For instance, the company has suspended overtime work.
Also, Takeda said the manufacturing unit has adjusted its production volumes. He said Isuzu Philippines last year churned out about 9,000 vehicles, all for sale locally. This year, however, the company would only assemble around 8,000 units. Locally produced vehicles compose between 80 percent and 90 percent of sales, Takeda said.
The Crosswind and D-Max models and Isuzu trucks sold in the country are manufactured in the company’s local assembly facility located at the Laguna Technopark Phase II in Biñan, Laguna. Completely built-up units of the Alterra, meanwhile, are imported from Thailand. Takeda said the Philippine unit also exports some components of the Crosswind to Vietnam.
Takeda added that the mother-company has also decided to freeze some investments, including further research and development, for the time being.
Takeda also said that selling their truck models lately has become “very tough” because of the entry of imported surplus trucks.
“[While] we are confident that our trucks are of good quality and performance, unfortunately, new trucks are more expensive than surplus trucks. That’s a headache for us,” he added.
Imported surplus trucks cost about a third of new ones, he said.
About 80 percent to 85 percent of their potential sales are taken away by these imported surplus trucks, he added.
Takeda explained that while the Philippine government has already prohibited the entry of imported passenger cars, truck importation is not banned. A truck could enter the country as long as it weighs less than six tons and has secured a prescribed clearance from the Department of Trade and Industry, he said.
Also, Takeda said China-made trucks flooding the market have also posed competition.
Hence, amid these trying times, Takeda said that aside from just selling vehicles, Isuzu Philippines is now also considerably looking at further tapping the maintenance services business.
“We think that the local car market will not drastically expand this year and maybe for another few years, but there is a large number of [already sold] Isuzu vehicles, which fortunately, need repair and maintenance. This is a very big business,” Takeda said.
“We told our dealers that since we cannot expect huge sales these days, we can concentrate on providing excellent services, including after-sales and spare parts [sales],” Takeda added.
“And by offering good services to customers, they may purchase again an Isuzu brand.” –Ben Arnold De O. Vera, Reporter, Manila Times