Automakers in the Philippines are expected to increase their contribution to regional production with the implementation of the Comprehensive Automotive Resurgence Strategy or CARS Program, the Trade department said.
Trade Assistant Secretary Rafaelita Aldaba, speaking at a supply chain conference on Friday, said the country was expected to expand its share of the Southeast Asian auto market to 8.3 percent in 2022 from 2.67% last year.
She said the Philippines produced about 80,000 cars last year, lagging behind the first half output of Thailand (nearly 1 million units produced), Indonesia (near 600,000 units), Malaysia (350,000 units), and Vietnam (near 100,000 units).
This year, Aldaba said, domestic vehicle production is expected to increase to “around 100,000.” With the conclusion of the six-year CARS Program in 2022, locally produced vehicles have been forecast to go up to 500,000.
The CARS Program seeks to support the production of at least 600,000 units of three vehicle models within a six-year window. A P27-billion budget has been allocated for the first year, which translates to a P9 billion production fund in 2016 for each model.
Under the program, beneficiary automakers have the first two years to prepare — partner with parts makers and plan manufacturing strategies – after production of at least 100,000 units should start during the third year.
Aldaba said that without the CARS Program, local auto production could go down to as low as 50,000 units per year, which would mean a 70-30 ratio in favor of imported vehicles.
She said the Trade department was aiming for a 50-50 mix of locally produced and imported vehicles by 2022.
“If you will look at the motorization ratio, the Philippine market of 100 million population is big. Our level of car ownership is still lower. But if we can increase the car ownership given the increase in wage earners in the country, then a lot can afford to buy vehicles,” Aldaba said.
“Our scope is wider so there is more potential to expand,” she noted.
Aldaba said they were also looking at many ways to complement the CARS Program to boost the local auto sector, including easy financing options and the scrapping of old vehicles.
She said the department was currently “studying” a program to phase out old vehicles — and maybe get some useful functional parts — by giving affected owners a form of support.
Aldaba said they were also waiting “for a private company to invest” in a venture focused on scrapping old cars. She said the department would try to come up with a framework on how this can happen to boost local car manufacturing.
“This is one of the many ways we’re looking at in stirring the demand for the local auto sector,” she said.