The Philippine Parts Makers Association (PPMA) warned that the veto of the Comprehensive Automotive Resurgence Strategy (CARS) and the Revitalizing the Automotive Industry for Competitiveness Enhancement (RACE) programs by President Ferdinand Marcos Jr. could push the local automotive manufacturing industry into deeper crisis.

On Monday, Malacañang announced that Marcos rejected the budget allocations for the CARS program, amounting to P4.32 billion, and the RACE program, pegged at P250 million.

Funding for the CARS and RACE programs was among 10 line items worth P92.5 billion that were vetoed from the P6.793-trillion 2026 General Appropriations Act (GAA) before the President signed the law.

PPMA President Ferdi Raquelsantos called for urgent dialogue with policymakers, saying the budgets for the two programs were not merely support mechanisms but a critical lifeline for the industry.

“The Philippine auto parts industry needs CARS and RACE to survive. Without sustained and predictable government support, local manufacturers will continue to lose ground, investments will slow, and skilled jobs will disappear,” Raquelsantos said in a statement on Wednesday.

Across Southeast Asia, automotive manufacturing consistently ranks among the top industries in terms of output, employment, and exports. Countries such as Thailand, Indonesia, and Vietnam have treated the sector as strategic, supporting it through long-term industrial policies and large-scale production.

Thailand alone produces more than two million vehicles annually, while Indonesia and Vietnam continue to expand both conventional and electric vehicle manufacturing.

Raquelsantos said that in contrast, the Philippines has steadily fallen behind its ASEAN neighbors. Local vehicle production remains limited, forcing many parts makers to rely on exports or non-automotive industries to stay afloat, as the gap widens while other ASEAN countries accelerate investments in new technologies and supply chains.

“The reality is we are already lagging behind ASEAN. Automotive manufacturing has always been a cornerstone industry in Southeast Asia. If we allow our ecosystem to weaken further, it will be extremely difficult to recover,” he said.

Industry data show that Philippine automotive manufacturing peaked in the 1990s under the Ramos administration following the implementation of the Car Development Program. During that period, the industry recorded stronger assembly volumes, higher local content, and a more robust domestic supplier base.

Although later initiatives under succeeding administrations attempted to revive the sector, the industry has never fully returned to that level of scale and stability.

“We were almost there. The factories are here. The suppliers are here. The workforce and technical know-how are here. What we need is continuity and confidence from the government,” Raquelsantos said.

PPMA also emphasized that automotive manufacturing has a strong multiplier effect, supporting industries such as steel, plastics, electronics, rubber, logistics, and tooling. Each locally assembled vehicle creates demand for thousands of parts, many of which can be produced domestically if volumes are sustained.

In response to the veto, PPMA called for constructive dialogue with government leaders, particularly senators and members of Congress, to explain how automotive industry programs work and why they matter.

“We want to engage, not confront. The auto industry is ready to sit down with our legislators to educate them on how CARS and RACE drive jobs, investments, and long-term industrial resilience. This is about building a competitive manufacturing base for the country,” he said.

PPMA stressed that time is critical and warned that without decisive action, the Philippines risks being permanently left behind in one of the region’s most strategic and value-generating manufacturing industries.

Earlier, the Board of Investments said it fully respects the President’s decision on the CARS program and understands the context of the veto on unprogrammed appropriations.

However, BoI Managing Head Undersecretary Ceferino Rodolfo assured investors that the agency is working with other offices, particularly the Department of Budget and Management, to identify mechanisms to ensure payment of CARS arrearages. He said these were based on validated performance commitments and a robust, transparent inter-agency vetting process for claims under the program.