Volkswagen pulls out of PH automotive market
The Ayala group’s Automobile Central Enterprise Inc. (ACEI) has come into an agreement with Volkswagen AG to end the distribution of the German brand’s vehicles in the Philippines.
ACEI, the exclusive distributor of Volkswagen vehicles in the country, said in a notice to customers that, considering this, Volkswagen BGC would continue its operations until Sept. 30 only.
“Despite this, your experience remains our top priority. Rest assured, Volkswagen vehicles will continue to receive expert care and support at [the following the facilities],” the distributor said.
These are the Alabang Service Center at the Madrigal Business Park in Muntinlupa City; another one along A. Soriano Avenue in Cebu City; and the Pampanga Service Center along MacArthur Highway in San Fernando.
Neither firm provided details on why they are ending their partnership.
However, industry sources said poor sales led to this decision, noting that market preference has shifted toward hybrid and electric vehicles.
In the case of Ayala, Chinese electric vehicle brand BYD has been the fastest growing in its automotive portfolio.
The Philippines’ oldest conglomerate and Europe’s biggest carmaker first announced their partnership on passenger vehicles in October 2012.
Back then, they said their “distributorship agreement brings together two premier corporate names to compete in an industry with high growth potential.”
Fernando Zobel de Ayala, who was then president of Ayala Corp., said Volkswagen would enhance their group’s portfolio of auto brands and “reinforce further” their strong presence in the Philippine automotive industry.
For its part, Volkswagen said they chose the Ayala group based on their “excellent reputation and market knowledge.”
Volkswagen was expecting the Philippines to contribute to their “vision to become the world’s number one car manufacturer by 2018.”
More recently, the Volkswagen group is struggling to recover from a slump in 2024 amid high costs and fierce Chinese competition. The German carmaker is navigating an industry transition and global trade tensions.
In 2024, Volkswagen’s net profit nosedived by 30 percent year-on-year to 12.4 billion euros ($13.4 billion) in 2024 as overall sales grew slightly to reach 324.7 billion euros.
The 10-brand group said its 2024 earnings were hit by high costs as it faces a shift to electric vehicles, weak demand in Europe and fierce competition from local rivals in key market China.
