Banks are now really starting to clamp down on auto loan approvals

Here’s how Kia PH is dealing with this trend
by Drei Laurel | Sep 25, 2020
PHOTO: Kia
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For the past several months, COVID-19 has essentially crippled the Philippine economy, and many are gripping their wallets tighter than ever because of it. In the local auto industry, slumping car sales are proof of this. Many plans to buy a dream ride have been put on hold, if not canceled completely, because of this pandemic.

It isn’t just car buyers, though, who are being more careful about money. Banks in the country are clamping down, too.

During a virtual press conference following a media preview of the upcoming Kia Stonic, Kia Philippines president Manny Aligada was asked by BusinessWorld motoring editor Kap Aguila regarding the current state of auto loans. The executive shared that banks have become very strict when it comes to auto loan approvals and that his company has had to make adjustments to deal with the trend.

“The approval rate is way down. In fact in some [banks] I have heard that it’s in single digits. That’s the reason why we have tried to change the way we do things in terms of targeting,” Aligada bared.

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“It happens that way if, for example, everybody lines up and asks for a loan. That’s going to get your rate [lowered] even further. So what we’re trying to do is we’re trying to work directly to the markets that we think will stand a better chance of [getting] approval.”

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Kia Philippines is making three key adjustments to adapt to the new state of auto loans. First, it is looking within its own network for potential sales. Secondly, it is training its sales staff to handle the situation better, and third, it is expanding its dealership reach to draw in more potential customers who may get approval.

“Within Ayala, for example, there are natural markets within us, the companies that we work with, that are members of the Ayala Group of companies, and of course, the interests are those suppliers, etcetera. Just looking at that, there’s a healthy source of sales. So we work on that from one side.” Aligada explained.

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“The other is those that are not Ayala-related but they mimic the Ayala environment. There are groups of companies that are like that. So conglomerates. So we work on that as well directly.”

Frontline staff, meanwhile, are being trained to better balance nailing down potential sales and keeping the loan process on the bank’s side efficient.

“We also train our frontliners so that they do not waste the time of the banks just sending any application form. They have to learn how it is to process. What’s happening to the banks now is that the time to process is taking really long,” Aligada said.

Mga three days you get your approval galit ka na diba? Ngayon one month? Hindi pa inaapprove. You will run after the bank. And therefore so many things can happen within that one month. That person may change his mind, may decide not to pursue, may decide to use his money elsewhere. That’s why our own sales forces are engaged to keep tact with the customer.”

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And as for casting a wider dealership net, Aligada likened the strategy to a traffic-clogged toll booth.

“What’s critical now is that even if the approval rates are thin, are low, the objective now is to create that pipe that goes through that. Masikip yung toll booth eh, pero yung entry point lalakihan namin ngayon para may lumusot. So that’s why we’re expanding our dealership network, for example,” he explained.

“We’re trying to extend our reach to where the target markets may be. Hindi naman bibili yan pag walang dealership. So we’re going to push for that and, luckily, there are interested parties.”

For the most part, it looks like Kia Philippines has a pretty sound gameplan for the coming months. The company is looking to make a splash in the new normal, too, by launching the Stonic next month—an entry-level subcompact crossover that’ll surely catch the attention of more budget-conscious buyers.

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So, have you experienced applying for an auto loan during the COVID-19 pandemic? Let us know what your experience was like in the comments.

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PHOTO: Kia
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