Automakers seek Duterte assurance on CARS

TOKYO, Japan – Major players in the Philippine automotive industry are set to seek an audience with incoming president Rodrigo Duterte, the top official of Mitsubishi Motors Philippines Corp. (MMPC) said.

Yoshiaki Kato, president and chief executive officer of MMPC, said the meeting with the Duterte administration would be arranged through incoming Trade secretary Ramon Lopez.

Kato said the major players would like to get an assurance from the incoming administration the government’s Comprehensive Automotive Resurgence Strategy (CARS)program would continue.

 The Department of Trade and Industry (DTI) has already approved the participation of MMPC and Toyota Motor Philippines Corp. in the CARS program.

Kato said major players are

concerned the implementation of the program would be derailed once Duterte is granted emergency powers to address the worsening traffic situation in the Philippines.

Under the program, Philippine car assemblers may apply for fiscal support not exceeding P27 billion by locally assembling three vehicle models, or P9 billion per model, with a commitment to produce 200,000 units for each model during its six-year model life.

For one, MMPC has committed to invest P4.3 billion under the CARS program. It already broke ground for a P2 billion stamping plant for the body shells of the hatchback and sedan Mirage models in Laguna.

Kato said MMPC is currently luring more parts makers to set up shop in the Philippines

amid the growing demand for motor vehicles.

He explained parts makers are concerned about the small automotive market in the Philippines.

Kato said output of the automotive industry in the Philippines is seen growing to 500,000 units by 2020 from the targeted 350,000 units this year.

“We estimate this year market will be more than 350,000 and in 2020 we expect it to be 500,000. Market is growing and parts suppliers try to have confidence in the Philippine market. Because market is growing, Japanese will have confidence to invest,” Kato said.

He said the incentives under the CARS program alone would not be enough to significantly bring down the prices of motor vehicles in the Philippines.

Specifically, Kato explained the $1,000 subsidy for the Mirage model under the CARS program is not enough to bring down the price of the car significantly.

Kato explained the size of the market in the Philippines as well as the competition among automotive suppliers are also factors they have to consider in the pricing of motor vehicles.

He cited the case in Thailand wherein vehicles are priced lowered compared to the Philippines due to the presence of several suppliers.

According to Kato, the CARS program requires investments in large parts like the body as well as the localization of some plastic parts.

“Competition is very tough so MMPC will make efforts to reduce cost but will require lot of efforts,” he added.