With the expected ramp up in local car manufacturing via the government’s Comprehensive Automotive Resurgence Strategy (CARS) Program, the Philippine Parts Maker Association (PPMA) said that employment in the whole Philippine automotive sector could increase up to 60 percent.
Ferdinand Raquelsantos, president of PPMA, said employment in the Philippine automotive industry could climb to 120,000 workers as the CARS Program boosts the local car manufacturing sector.
“We estimate new job opportunities of about 60 percent of the existing 70,000 employees in the entire auto industry,” Raquelsantos said.
Under Executive Order (EO) 182 signed by the president in June 2015, the CARS Program seeks to incentivize the mass production of three model units, with a production target of not less than 600,000 units or 200,000 of each model within a six-year timeframe.
The government’s CARS Program will give monetary incentives to car and car parts makers who applied for the program, having a budget of P27 billion for the three model units for 2016, the first year of the program.
“But EO 182 does not benefit car assemblers alone. It also mandates local manufacture of body shells and large plastic parts, common parts and strategic parts and investments in shared testing facilities for autos and parts. In effect, local parts makers like us benefit from it too,” Raquelsantos said.
In the first two years of the CARS Program, the PPMA president said his group expects 36 new joint ventures (JV) and technical licensing agreements (TLA) of local and foreign investors in the parts-making business to satisfy the requirements of the program.
“We project some 36 new JV and TLA under the CARS Program within the next two years. In fact, as early as now, one Japanese metal stamping company has confirmed a TLA with a local metal press shop to invest in tool and die in producing locally some big metal car body components,” Raquelsantos said.
The incentives from the CARS Program, he said, is beneficial in “doubling the volumes” of the local auto industry, saying that it will encourage more investors in the Philippines than in neighboring auto-making economies.
“For so long, the Philippine auto industry has lagged behind our Asean neighbors due to inferior incentives. The CARS Program bridges the gap somehow and levels the playing field somewhat. But not enough, though,” he said.
“We used to spend about $1,800 more per unit to produce the same car model compared to them. With about $1,000 in incentives from CARS, this is down to a manageable $800 per unit,” he added.
The Philippines might not be able to produce and export completely built-up (CBU) vehicles, the PPMA president said the country still have edge in the parts making sector as it is “one of the biggest exporters of auto parts.”
“Thanks to the previous Motor Vehicle Development Program, the Philippines [has]exported a lot of wiring harnesses and became the regional hub for transmission and gears manufacturing for cars for Mitsubishi, Isuzu, Honda and Toyota. For the last several years, we have been exporting various auto parts [amounting to]$3.8 billion annually in 2013 and $4.3 billion in 2014,” Raquelsantos said.
“We are confident that we will do even better with the CARS Program in place,” he added.
Out of the three slots available to car manufacturers in the program, only Toyota Motors Philippines Corp. and Mitsubishi Motors Philippines Corp. have expressed interest to join the CARS Program, applying with their top-volume models Vios and Mirage, respectively.
Toyota is putting down more than 1 billion yen for the first two years of the program, while Mitsubishi estimates it will allocate P3 billion for the program.
The submission of entries for the CARS Program beneficiaries will run from the last week of January to March 15.