TWO of the country’s carmakers, Isuzu and Kia, are taking a wait-and-see stance on the government’s Comprehensive Automotive Resurgence Strategy (CARS) program, which is meant to boost local car production.
Their reasons include the huge volume requirement to join and some car parts suppliers’ belief that the incentive program for smaller players is still vague.
Isuzu Philippines Corp. marketing manager Joseph T. Bautista said that while the CARS program is good as it could bring down the cost of cars, the requirement to produce 200,000 units for one car model over the six-year period is huge.
“We cannot do it. We don’t have the economies of scale. We’re on a wait-and-see (position) because hindi kaya ang (we can’t meet that) volume. (If the government intends to lower the volume), pag-aaralan pa naming (we would study it further) because that entails investment,” Bautista told reporters at the sidelines of the launching of the 2017 D-Max last Thursday, Sept. 8, in SM City Cebu.
The Isuzu plant in Laguna, according to Bautista, produces a total of 15,000 vehicles of different models, and if it intends to participate in the CARS program, it would have to expand its facility.
Cars in the Philippines are US$1,800 more expensive than cars in Thailand. But with the CARS program, Bautista said, the cost of vehicles might go down.
Likewise, Columbian Autocar Corp. president Ginia Domingo, the exclusive distributor of Kia in the Philippines, said they hope small carmakers would be given the opportunity to participate.
Under the CARS program, the government would provide incentives to three carmakers to locally produce three car models with a production volume of at least 200,000 units for up to six years, or an average of 33,333 vehicles per year.
Resurgence
The program is spelled out in Executive Order 182, which then president Benigno Aquino III signed in May last year to support the country’s automotive manufacturing industry by providing P27 billion worth of incentives to local automotive assemblers.
At present, participants include Toyota Motors Philippines Corp. who pledged to manufacture the Vios, while Mitsubishi Motors Corp. enrolled its Mirage/Mirage G4 subcompact for the car resurgence program.
In the case of Isuzu, Bautista said they are selling some 27,000 vehicles across all models in a year.
The CARS program, meanwhile, requires 35,000 car sales for one model alone, he said.
The Isuzu official believes the CARS program is primarily beneficial to the car parts makers who will produce small metal and plastic parts, carpets, and seat belts, among others, as demand is anticipated to soar.