Auto assembly could cease in PH

By Catherine N. Pillas, BusinessMirror

Posted at Jul 08 2014 07:34 AM | Updated as of Jul 08 2014 07:26 PM

MANILA - The country is at risk of losing vehicle-assembly operations if the proposed auto industry road map—which is meant to boost the competitiveness of local players in time for the regional economic integration—will continue to experience delays, the Chamber of Automotive Manufacturers of the Philippines Inc. (Campi) said.

“The government has to release this [road map] as soon as possible. It is critical at this time for the government to intervene so we can convince our principals that it’s worth producing here. Other countries are giving more incentives so it’s possible that local production may disappear,” said lawyer Rommel Gutierrez, president of Campi and first vice president of Toyota Motor Philippines Corp. (TMPC).

He said in the case of Toyota, TMPC has been constantly convincing its mother unit in Japan to retain the production of the Innova and Vios in the Philippines every time there is a model change.

This, Gutierrez said, is because the cost of producing the Vios here is about $2,000 more expensive than in Thailand, for instance.

Gutierrez said Campi is urging the government to at least help in lowering the production cost in the country through a combination of schemes as detailed in their proposed industry road map.

“Closing the gap is just an equalizer. For us to be competitive, it has to be more than that,” Gutierrez added.

Gutierrez noted that even the government has conceded that the cost difference of $2,000 must be brought down. The government has committed to aid the industry, but not the entire amount. The state support, he added, will also come with trade-offs as the industry will also need to commit additional investments, including increasing their parts and components manufacturing capacity.

He said the government will still study how the support will be distributed, but the idea is to bridge the huge cost difference. Thailand is producing over a million vehicles every year.

On the other hand, the Philippines, due to competitiveness issues, only assembled about 80,000 units in 2013 while selling 200,000 units domestically.

Gutierrez said the industry is on course of hitting sales of 300,000 units by 2016. But this volume, he added, still does not guarantee the Philippines will be able to retain the vehicle-assembly operations in a regional setting where tariffs barriers have been dismantled.