File this under good idea, but clueless about automotive reality. “Purisima bats for smaller cars.”
Trade and Industry Secretary Cesar Purisima is urging local automotive manufacturers to bring in cars with an engine displacement of 1,000 cc or less to help lessen the country’s fuel consumption and provide an alternative to cheap second hand imported cars.
According to Purisima, using small cars with an engine displacement of 1,000 cc or less consumers [sic] less fuel, is cheaper than the two-liter car models and is easier to maneuver in traffic.
The smaller cars, Purisima said, would also cost much less at around P300,000 to P400,000. Using small cars, Purisima pointed out, are the trend in other countries.
To help encourage local automotive manufacturers to bring in the smaller, Purisima said, the government could look at possible incentives.
Great idea, I agree. Smaller cars, lower price points, less petrol consumption, less polution. It all sounds great, as far as it goes, but lets look at the business side.
Traditionally, and almost without exception, the smallest cars in a manufacturers lineup are “loss leaders.” A company is willing to produce certain models (the smallest and cheapest) that lose money. Decades of market research shows it is rare a customer that leaves a showroom with a “barebones” vehicle. Any profits on compact vehicles are derived from the long list of options the salesmen entice your ego with and you ultimately get suckered into buying. What’s that? You say you have will power and can resist the machinations of a sleezy salesman. You say that now, before you hear that P8,000 CD player, that cost the dealer P2,000. Or the trendy P20,000 leather interior at a cost to the dealer and manufacturer P12,000.
I have to wonder what countries are trending to smaller cars that Purisima refers to. Damm sure isn’t the US or Canada. Europe has always had a mostly small car market, same for Japan, Korea ( the two bigest Asian markets) and most other Asian countries. I think Purisima is useing a little “salesman machination” himself.
What type of “incentives” are we talking about? Tax breaks? Not a good idea when the budget has a soaring deficit, and a BIR tax collection rate that borders on the absurd.
This is a nice press release Cesar, but its connection to any automotive reality is minimal at best.
Upon further review: Of the four major importers of automobiles to the Philippines, Toyota, Honda, Mitsubishi, and Mazda, only the Honda City equiped with a 1.3 litre diesel comes near to meeting Purisima’s acceptable criteria for engine size and price point. All do offer many models with 1000cc engines for Japan’s domestic market, but fail to meet the price range by a fairly large margin. And from 7 years experience dodging these rolling shoeboxes on the streets of Tokyo, I can tell you they are not suited for the pothole infested roads of Manila and other Philippine Cities.
This raises the question, what will Purisima do to convince them to import these models to the Philippines? And before you answer consider this; The Philippine auto market is very small, somethng less than 50,000 a year divided among the four Japanese companies the US, and a few European makers. Of those, only the US offers autos with left-hand drive. All the others would have to be convinced it was worth the effort to convert a very small percentage of their model lineup to left-hand drive and import them to the Philippines as a “loss leader.”
I have already answered the question, “Dream on Purisima,” anyone have a better answer?
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