• A long-time love affair

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    brio20160524Fast Times explores the Philippines’ affinity with Japanese cars

    If you’re not so busy, go out into the street and look at the cars passing by.

    No, this isn’t a prelude to a music video or a television drama. But stand out there for a minute and notice the brands of the cars driving past. Amid a sprinkling of Fords and Chevrolets (and perhaps the occasional BMW or Jaguar), the vast majority of vehicles running on that road over those 60 seconds have logos of companies like Toyota, Honda, Nissan, Mitsubishi and Isuzu.

    And it’s the same story when you walk into a parking lot or look at all the vehicles that are (illegally) parked along the street. Most of the cars that occupy everything from alleyways to expressways in our country are from the Land of the Rising Sun. Indeed, a look at the top-selling car brands in the Philippines shows a list dominated by the Japanese. You might even have one or two Japanese cars in your garage at this moment.

    Have you ever wondered why and how Japanese cars became so popular in our country, considering the Japanese colonized us only for three years—from 1942 to 1945? Fast Times talked to car industry veteran and mechanical engineer Gabby Peren to find out.

    American domination
    Peren said the Philippine automotive landscape half a century ago was far different from how it looks today.

    “When I started getting into cars as a high-schooler in the 1960s, I saw that our roads were filled with cars from the ‘Big 3’ US carmakers: General Motors [GM], Ford, and Chrysler,” he said in a phone interview. “Meanwhile, European brands like Volkswagen, Austin, Renault and Peugeot took the lower end of the Philippine car market, with many being used as taxis. An exception to this is Mercedes-Benz, which established itself early on as a premium European car brand.”

    ertiga20160524Peren said he started his career in GM’s local transmission plant in 1973 until he was the company’s last employee, serving as the plant’s caretaker after it shut down in the mid-1980s. However, Peren said the recurring energy crisis that the world experienced starting in the early 1970s meant the Philippine government, then under President Ferdinand Marcos, implementing measures to lessen consumption of scarce oil resources. One of these was to impose higher sales and registration taxes on cars with over 2,000 cubic centimeters in engine displacement.

    “This was very problematic for the American car manufacturers as they sold large, heavy cars with very big engines in the Philippines,” he said. “In addition, they weren’t very good at making smaller cars themselves. And so, they tied up with other companies so that they could sell models in the lowest tax bracket, which resulted in the introduction of models like the Ford Escort and Cortina, as well as the Opel Manza for GM.”

    The second Japanese wave
    At the same time, Peren said Japanese carmakers started entering the local motoring scene, with Toyota putting up a manufacturing plant sometime in 1974. He said this was one of the large-scale reparation efforts Japan did for the Philippines after World War II.

    “I think this is one reason why Filipinos were forgiving to the Japanese, despite our experience of being colonized by them for a few years,” he said. “And even before putting up the Toyota plant, Japanese vehicles had already been in our country because the Japanese government brought in Toyota vehicles [like the Land Cruiser]to help rebuild the damage they caused in the country.”

    Peren said even the American car companies started tying up with the Japanese. He said this partnership brought in models like the Isuzu Gemini (a tie-up between GM and Isuzu) and the Dodge Colt (a Mitsubishi Colt that was rebadged by Chrysler).

    mitsubishi20160524Pioneering vehicles
    Peren said Japanese cars became popular in the Philippines not only because they ably complied with government regulations, but also because of their impressive levels of standard equipment.

    “Air-conditioning wasn’t a standard feature in most cars back then, so if you wanted it, you had to have an air-con unit installed in an aftermarket shop,” he said. “But Filipinos were amazed that the Japanese brands offered this and other amenities right out of the factory. They also liked the cars’ sporty-looking interiors, along with being able to choose among several trim levels of one model.”

    Peren also said the rapid development of quality and manufacturing processes by Japanese carmakers eventually made their products better than what the US was making at the time. However, the hostile social, political, and economic climate during the 1980s (culminating in the EDSA Revolution) resulted in Japanese carmakers, along with their American counterparts, shutting down their Philippine operations.

    Back on Philippine soil
    After Marcos was ousted as the country’s president in 1986, Peren said investors started returning to the Philippines. Among them were Japanese car companies, such as Honda and Toyota, which were interested in opening manufacturing plants in the Philippines. He said these companies garnered instant success because they fed a public that had been starving for new car models.

    Peren said he was even among the first members of Honda Cars Philippines Inc. (HCPI), serving as the company’s first engine-plant manager when it started operations in 1992. He said Japanese cars of this era were far superior to those made during the Marcos years primarily because these now complied with global quality standards.

    “During the Marcos regime, all car plants used the lowest-quality parts and materials, which included things like plastic upholstery,” he said. “However, these newer models featured things like cloth and leather upholstery, along with a host of other major improvements. Indeed, it was like the Philippine car market skipped an entire generation.”

    Peren said he stayed with HCPI for nearly two decades, working as head of product engineering from 1995 to 1997, where he helped develop products for the Philippine market.

    “Two to three years before the models became available in the Philippines, we were already testing them out and determining what specifications these should have,” he said. “Among the cars we brought in were the original CR-V and the Civic SiR.”

    Peren also served as the company’s head of sales operations from 1997 to his retirement in 2010, where he managed all of HCPI’s dealers, as well as the company’s logistics. However, he said he stayed with the HCPI for two more years as a consultant, upon the request of the company’s president, to help train the new people.

    Robust future
    Peren said he sees Japanese carmakers continuing to have a strong presence in the Philippines in the coming years, especially since they have manufacturing plants in the country. “They will continue to have strong commitment from their mother companies,” he said.

    He added the Comprehensive Automotive Resurgence Strategy (CARS) Program—launched in mid-2015 to offer incentives to carmakers to ramp up production in the Philippines—would certainly play a part in reinforcing this dominance. The program gives three approved car companies around P9 billion in incentives each to produce a minimum of 200,000 units of a specific model over six years, equating to about 33,000 units a year. It aims to elevate the Philippines as a regional automotive manufacturing hub by encouraging new investments, stimulating demand, and implementing industry regulations.

    So far, only Toyota (with its Vios) and Mitsubishi (with its Mirage hatchback and Mirage G4 sedan) have submitted proposals to the government to participate in the CARS Program.

    “It’s kind of a loaded dice because only Japanese carmakers have the kind of facilities that would be able to produce that sort of output,” Peren said.

    However, he pointed out that carmakers from other countries, which don’t have local manufacturing plants yet, would certainly keep trying to gain a stronger foothold in the Philippine car market. For instance, Volkswagen Philippines chief operating advisor Klaus Schadewald told Fast Times in an interview that the German carmaker would continue to negotiate with the Philippine government on opening a manufacturing plant in the country.

    Indeed, with the Philippines’ rapidly growing and changing car market, who knows how tall the flag with the red sun will wave in the years to come?

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