PH gears up as Asia’s auto hub

“Automobile manufacturers who enroll under the program will be granted $200 million in tax and fiscal incentives to each of the participating programs.

Toyota Motors Philippines (TMP) unveiled on Thursday its all-new Vios, the first model to be built entirely in its sprawling Sta. Rosa, Laguna branch under the government’s Comprehensive Automotive Resurgence Strategy (CARS) program aimed at revitalizing the country’s car manufacturing industry.

With the launch, Department of Trade and Industry (DTI) Secretary Ramon Lopez said the Philippines took an important milestone to achieve its goal of becoming Asia’s car manufacturing hub.

“The CARS Program is at the heart of our Manufacturing Resurgence Program. With MRP, we will rebuild the existing capacity of our local industries, strengthen new ones and maintain their competitiveness. More importantly, this program — among the many initiatives under the Duterte administration — will help us create more jobs and income opportunities for our people as mandated by the President,” said Lopez at the ceremonial roll-off of the Vios.

Under the CARS, automobile manufacturers who enroll under the program will be granted $200 million in tax and fiscal incentives in each of the participating programs. However, they are required to produce 200,000 units for the enrolled model within six years.

Lopez also called on TMP to exert effort to exceed the 50 percent minimum local component requirement under CARS. He explained the MRP, supported by the 2017 Investment Priorities Plan (IPP), would close the gaps in the industry supply chain by providing access to raw materials and expand the local markets and exports for locally manufactured products.

The Duterte administration, he said, is pushing for the growth of the domestic manufacturing sector through “localization” of supply sources, which would generate more jobs and provide better opportunities for small-and-medium enterprises (SME).

Indeed, the trade chief disclosed the manufacturing sector is one of the main drivers of the country’s healthy growth and contributed significantly to the 6.8 percent GDP (gross domestic project) growth in 2017 and the first quarter this year.

At the same time, Lopez expressed hope TMP maintains its success so it could raise its current workforce from 3,000 to 10,000.

“I would like to see the friends, relatives and neighbors of your employees here to start working in this plant in the near future,” he said as he encouraged TMP to participate in the government’s initiative to modernize public-utility vehicles.

However, CARS’ road to making the Philippines a center of vehicle manufacturing is littered with the debris of uncertainties coming from an above-average inflation rate and the tax reform package under the Tax Reform for Acceleration and Inclusion or TRAIN law, which moderated vehicles sales in June by 21.7 percent and 12.5 percent drop year-to-date.

Data from the Chamber of Automotive Manufacturers of the Philippines Inc. (Campi) and Truck Manufacturers Association (TMA) showed five months of consecutive sales slump with June vehicle sales falling to 29,350 units from 37,479 units from a year ago. From January to June, vehicle sales dropped 171,352 units from 195,772 units in the same period last year.

Campi president Rommel Gutierrez said consumers’ priority of food over new cars is responsible for the drop in sales. “However, we remain optimistic that our sales will recover in the coming months,” he said.

In a separate report, the Association of Vehicle Importers and Distributors (AVID) said sales of imported automotive vehicles in the first half dropped 11 percent in the first half to 43,138 units from 48,344 units in 2017.

Total six-month sales for passenger cars went down by 14 percent to 16,176 units from 18,679 units sold in 2017. For light commercial vehicles, the segment’s sales decreased by 10 percent.

Despite the challenges, TMP remains optimistic its new Vios will help the company recover sales after the market correction in the second half of the year.

“Much of this model is proudly made in the Philippines, a total of 352 individual parts, 22 percent higher than in the previous Vios. This localization is the result of P5.53 billion in investments by TMP and local suppliers, which represents our collective contribution to the country’s long-term economic growth,” TMP president Satoru Suzuki said in his speech.

He added the revamped Vios is 40 percent made of local parts in keeping with the company’s support of the government’s localization initiative. Its Santa Rosa plant is aiming to increase its Vios monthly output to 3,500 units.

“The volume hurdles are high, but we will be able to achieve the goal,” he said.

TMP vice chairman Alfred V. Ty also expressed confidence in the country’s strong economy, which, he said, would improve consumer confidence.

“It (economy) has propelled the growth of the auto market, which has averaged 23 percent annually in the last four years. So far, 2018 has been a market correction after 2017’s exceptional performance, but the long-term trend remains solidly upbeat,” Ty said.

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