Mitsubishi to assemble new model in Sta Rosa

by Catherine N. Pillas, BusinessMirror

Posted at May 19 2014 09:18 AM | Updated as of May 19 2014 05:18 PM

MANILA, Philippines - Mitsubishi Motor Philippines (MMP) will produce a new model at its recently acquired plant in Santa Rosa, Laguna, which will start operations in January next year.

With the planned assembly of the new model in its Santa Rosa facility, the company is now setting its sights on a 50:50 ratio for its locally manufactured vehicles and imported completely built units.

“We want to raise the ratio to 50:50; but it’s better if the locally manufactured share is higher,” MMP President and Chief Executive Officer Hikosaburo Shibata told reporters on Friday during the 100,000th unit roll-off ceremony of the Mitsubishi Adventure.

“MMP is also now studying what models we can produce at the Santa Rosa plant, in addition to what we are currently producing. We’ll be transferring production of the Adventure, the L300 and the new model. Production will start in January of 2015,” said Vice President for Marketing Services Froilan Dytianquin, referring to the newly purchased manufacturing plant formerly owned by Ford Motors Co.

Dytianquin added that they hope to hit the balance when the new model comes in, the choice for which is still being studied.

Currently, the Japanese automaker’s ratio stands at 30:70 in favor of imported units. The auto firm produces the Adventure, L300 and a minimal volume of the Mitsubishi Lancer Ex in its current facility in Cainta, Rizal.

The Cainta facility, which has a capacity of 30,000 units with actual production at 15,000 units, will be sold within the year as Mitsubishi transfers its operations to the 21-hectare shuttered ex-Ford plant in Santa Rosa.

The new plant has a capacity of 50,000 units, which the firm can expand to 100,000 units by 2020, Dytianquin said.

Increasing the locally produced vehicles’ share in total sales is important, said Dytianquin and Shibata. But they emphasized the importance of the government’s automotive industry road map to determine the support, both fiscal and nonfiscal incentives, that firms may receive to assemble vehicles locally.

Shibata mentioned the oft-cited fact that production cost in the Philippines is higher than those in Thailand and Indonesia as highlighted the significance of incentives to support local manufacturing in the automotive sector.

As to the new model to be produced at the Santa Rosa plant, Shibata said MMP is at the evaluation stage but it may center on a particular car platform with derivatives, such as a passenger-car model with various model configuration.

The choice for the vehicle model, added Dytianquin, must be a balance between the market preference or customer demand and the profit margin that the company may gain.

“It’s a matter of balancing factors such as the car platform life cycle, the requirement of the market and the competitiveness in the market. the passenger-vehicle segment, just for example, has a lot of rivals, so we don’t expect a large margin there compared to, for example, SUVs, where our margins are considerable,” Dytianquin said.

The hike in Mitsubishi’s production capacity in the new plant will depend on the new model to be produced there.

However, Dytianquin mentioned that if actual production does reach 50,000 units, there may be a possibility to export a particular vehicle model.

Meanwhile, Shibata said the auto firm is also keeping its target of selling more than 50,000 units this year comprised of locally produced vehicles and imported units despite a two-month transition period as it shifts operations from Cainta to Laguna.

Dytianquin said they are currently accumulating inventory to fill the two-month gap.

Mitsubishi sold 43,000 units in 2013 and has been experiencing growth year-on-year for seven consecutive years.

MMP saw a 21-percent year-to-date growth in April, taking a 23-percent market share.

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