Message from the Company President
The Philippine automotive industry had a banner year in 2010 as new vehicle sales soared to an all-time high of 169,972 units. Ayala Automotive Holdings Corporation (AAHC) accounted for 7% of total industry sales and is one of the country’s largest vehicle retail companies. Its strong dealership network continues to deliver quality leadership and service excellence, affirming its commitment to total customer satisfaction.
The Philippine automotive market is expected to be more challenging and competitive in 2011. With the entry of new brands in the local industry, we expect a more extensive range of product offerings, more aggressive pricing, and intensified promotional activities. Moreover, the full impact of the recent natural calamity that hit Japan on March 11, 2011 will have yet to be assessed given the dominance of Japanese auto brands in the country. But our view at this early stage is that any supply gap that may arise as a result of manufacturing disruptions may be filled, as most of the Japanese automotive players have integrated facilities within the ASEAN region with complementary component suppliers.
We are likewise encouraged by the government’s move to support the auto industry. The government’s new Motor Vehicle Development Plan (MVDP) under Executive Order 877-A, demonstrates its efforts to strengthen the local automotive industry and curb pre-owned vehicle importations into the country. While discussions on the implementing guidelines have created some differences between assemblers and pure completely built-up unit importers, we are confident that they will come to an agreement that will ultimately lead the country towards a higher level of competitiveness in this liberalized business environment.
Ayala Automotive is ideally positioned to take full advantage of the opportunities from the expected take-off of the local autoindustry. The Honda and Isuzu brands have a strong franchise and continue to enjoy high market acceptance. As we approach the 20th year of our Honda dealership operations and the 15th year of our Isuzu dealerships, we reaffirm our commitment to work closely with our principals, Honda Cars Philippines Inc. and Isuzu Philippines Corporation to better position our current line of products and services.
As we continue to fortify and grow our current businesses, we also look into building on our current portfolio of auto brands to enhance our competitiveness in the market. In the same manner, we remain steadfast in our commitment to our customers and stakeholders as we look ahead to achieve more milestones. Drawing from our financial and organizational strength and the strong brand equity of our strategic partners, AAHC will continue to be a key player in the Philippine automotive industry.
RUFINO LUIS T. MANOTOK
Chairman and CEO
OPERATION S REVIEW
Commercial vehicles (CV) accounted for 65% of industry sales or 110,672 units. This was 28% better than the 86,346 units in 2009. Asian Utility Vehicles and Sports Utility Vehicles dominated the CV segment, each taking up a 36% market share.
Passenger cars (PC) grew by 29% and accounted for 35% of the total automotive market as the market continued to shift to smaller displacement engines.
Honda Cars Philippines Inc. (HCPI) slipped to fourth place in the local automotive market but retained its strong position at second in the PC segment. It registered sales of 16,604 units for the year, 3% behind 2009 level. Its market share contracted from last year’s 13% to 10% as a result of inadequate supply in the first half of the year and end-of-cycle design of most of its vehicle models. Sales of Honda City reached 8,914 units and accounted for 54% of Honda sales. Civic and CR-V models had a 17% and 14% share in total network sales. The Ayala Honda dealerships accounted for 50% of total HCPI unit sales and captured four out of the top six positions among the dealers in the country with Honda Cars Alabang as the leading dealer
in the network. Honda Cars Cebu Inc. sustained leadership in the provincial network.
Isuzu Philippines Corporation (IPC) sold 10,695 units, 16% higher than last year. This was driven by the strong sales of the Crosswind with 5,772 units sold in 2010, 19% higher than 2009 sales. Isuzu’s market share, however, declined to 6% from 7% the prior year. The Ayala Isuzu outlets recorded lower market share of 30% but remained the largest Isuzu dealership group in the country.
Combined, the Ayala dealerships accounted for 7% of total auto industry unit sales. Ayala Automotive Holdings Corporation’s consolidated income reached P295 million, up 29% from prior year.
In support of local automotive industry players, the government crafted and issued Executive Order (EO) 877-A or The Comprehensive Motor Vehicle Development Program (MVDP). The new MVDP aims to strengthen the local industry in light of the heightened competition as a result of the elimination of car and part tariffs from trade pacts under the ASEAN Free Trade Agreement and the Japan-Philippines Economic Partnership Agreement. The MVDP ultimately hopes to bring assemblers and importers together and steer the Philippine auto industry towards regional competitiveness amidst a highly liberalized trade environment.
The year 2011 will be increasingly challenging. Industry players are expected to expand their product lines and launch more aggressive marketing and sales promotions. In view of this competitive landscape, AAHC will continue to widen its reach and improve access for customers through more service outlets in strategic locations, an expanded scope of services, and continuous upgrade of existing facilities and service equipment in order to be more responsive to customers’ needs.