Vehicle assemblers seek stronger government support

MANILA, Philippines — A group of local vehicle assemblers yesterday said government support through incentives would be necessary to make the country a competitive place for local vehicle manufacturing following the announcement of Honda Cars Philippines Inc. (HCPI) to halt production operations.

“The remaining local vehicle manufacturers or assemblers need incentives and strong government support and assistance to maintain the viability of their local production and stay competitive in the region,” the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) said.

The statement was made following HCPI’s decision to close its automobile production operation in Sta. Rosa, Laguna which would take effect on March 25.

CAMPI said HCPI’s move is unfortunate as the company has been a strong advocate of local manufacturing.

“At this critical stage, the Philippine government must seriously study any initiative that will disincentivize domestic auto assembly operation as this will further endanger employment and existing investments, among others,” the group said.

The group said consistent government policy is critical to maintain investor confidence.

HCPI said the move to close production operations is intended to be able to efficiently allocate and distribute resources while delivering reasonably priced and good quality products.

Amid slowdown in global automotive market as well as emergence of new technology affecting the sector, HCPI spokesperson Louie Soriano said Honda needed to consider allocation of resources and focus on production operations that would yield high volume.

“There was a need to close the Philippines’ plant because of low production volume,” he said.

While HCPI’s plant which assembles the City and BR-V vehicles has an annual capacity of 15,000 units, the firm’s actual output only reached 8,000 units last year.

Soriano attributed the low utilization of the plant to market demand.

Like many players in the automotive industry, HCPI registered a 27 percent decline in sales to 23,294 units in 2018 from 31,758 units in 2017, as the government slapped higher taxes on automobiles under the first package of its tax reform program.

Last year, HCPI was still reeling from the effects of the higher taxes as it sold 20,338 units, 13 percent lower than the 23,294 units in 2018.

Soriano said apart from the Philippines, Honda is closing production facilities in the UK, Turkey, Argentina and Mexico.

Asked about HCPI’s plans with its plant after its closure, he said nothing is definite for now.

Trade Secretary Ramon Lopez said there are new automotive players that are interested and looking for production facilities in the country.

“As you know, there are new brands that are in the market right now but just imported. Given certain volume, it’s possible for them to open an assembly here as well,” he said.