Auto parts makers welcome IRR for CARS Program

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THE Philippine Parts Maker Association (PPMA) lauded the issuance by the Board of Investments (BOI) of the Implementing Rules and Regulations for Executive Order (EO) 182 or the Comprehensive Automotive Resurgence Strategy (CARS) Program on December 19.

This is the new version of what used to be the Motor Vehicle Development Program.

The IRR issuance has been very much awaited by the entire auto industry because it provides for the fiscal and non-fiscal incentives to encourage the local assembly of automotive vehicles, PPMA president Ferdinand Raquelsantos said in a press statement.

“Now, we expect the car assemblers to go full blast with their expansion and product developments plans that they have temporarily shelved while waiting for this IRR. We expect investments in the auto industry, both foreign and local, to now go full steam ahead,” Raquelsantos said.


He said the CARS Program was crafted and refined over the last three years and involved numerous consultations between the BOI and the various stakeholders of the domestic auto industry including local auto parts makers.

Under the CARS Program, two prospective local car assemblers may apply for fiscal support not exceeding P27 billion by locally assembling three vehicle models, or at P9 billion per model, with a commitment to produce 200,000 units for each model during its six-year model life.

Raquelsantos said that this is the lifeline that the struggling local auto parts making industry has long been waiting for.

“Since this will mean an increase in local auto assembly and production of an average of 100,000 units per year, or more than double last year’s local production of 88,000 units, this will result in the same increase in the demand and local manufacture of auto parts. This bodes well for us, the local auto parts makers.”

“Add to this the opportunity for local auto parts makers to forge joint-venture partnerships or technical licensing agreements with foreign original equipment suppliers to localize the manufacture and assembly of vehicle components and parts. This will result in both an inflow of foreign investments and ultimately, a transfer of technology that will benefit the local parts making industry,” he said.

He added that EO 182 and its IRR even specify that the body shell assembly, large plastic assemblies, common parts and strategic parts will now be the local activities in the program.

“So, even though most of the big body shell parts will be done by the car assemblers, it is the desire of local parts makers to get some of the small sheet metal components like brackets, stiffeners, latches and the like for them to press, stamp and fabricate, while at the same time providing the tools, dies, molds and fixtures required.”

PPMA is elated that the CARS Program also provides support for shared testing services and facilities which local parts makers badly need.

“For so long, this has been a missing link. Now, local parts makers can complete their product design and development with the tests required that can now be done locally,” Raquelsantos said.

“Noteworthy is the initiative made by the Department of Science and Technology and the Metal Industry Research and Development Commission in providing their new sets of testing tools and equipment to complete the much-needed testing validation that local parts makers used to farm out to other Asean countries. Needless to say, this will mean savings and faster product development time for us,” he said.

This year, as the Philippines enters the threshold of what is perceived to be the third wave of Asean motorization, the local auto parts industry is in a very good position to capture and use this wave “to surf our way to an unprecedented auto industry growth,” he said.

“It has been validated that motorization or an increased demand for automotive products usually starts at a GDP per capita level of $2,500. We are now at almost at the $3,000 level, so the growth of the domestic auto industry is imminent. This can happen with the support of government. We just need to play our cards right.”

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