AFTA won’t affect CKD operations of local car firms — Nissan exec

The implementation of the ASEAN Free Trade Agreement (AFTA) will not adversely affect the local motor vehicle industry’s completely knocked down (CKD) operations.

According to Val de Leon, vice president for corporate planning of Nissan Motors Philippines Inc. (NMPI), "there is actually a bigger possibility that CKD assembly operations in the country may boom since there would now be a larger market for the vehicles."

NMPI, for instance, De Leon disclosed, is mulling the feasibility of going into CKD operations here for its latest van model, the Serena QRV.

NMPI president Jack Wu said that since the launch of the Serena QRV about two months ago, NMPI has ran out of stock of the van.

"NMPI sold 150 units of the Serena QRV and are importing another 200 units to fill up orders for the van," Wu said.

The Serena QRV, at present, is imported as a completely built-up (CBU) unit.

CBU packs are currently subject to a 30-percent tariff as against CKD packs which carry a tariff rate of 10 percent for passenger cars and three percent for commercial vehicles.

There are fears that with the advent of the AFTA and the lowering of effective tariff rates to between zero to five percent, local car manufacturers would shift to CBU imports and stop CKD operations which have a value-added component.

CKD assembly provides employment as against CBUs which are already assembled and are merely sold right away by dealers.

De Leon pointed out that because of the ASEAN complementation scheme, some countries would tend to specialize in the assembly of certain models and import other models from other ASEAN countries which assemble other models. – Marianne Go