Mitsubishi to invest P4.3B in CARS bid

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JAPANESE auto giant Mitsubishi Motors Corp. is investing P4.3 billion in the Philippines, MMC chairman and chief executive officer Osamu Masuko announced in a company briefing for the media in Solaire Hotel in Pasay City on Tuesday night.

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Masuko said Mitsubishi aims to ramp up production in the Philippines, amid a sound economy, and to bid for incentives under the government’s Comprehensive Automotive Resurgence Strategy (CARS) program.

Masuko said Mitsubishi aims to produce 100,000 vehicles from its Philippine plant in Sta. Rosa, Laguna.

He said if the government approves its bid for CARS incentives, Mitsubish would mostly use the additional investment to develop stamping equipment for body shells and other metal parts, mainly to build the top-selling Mirage hatchback and Mirage G4 sedan starting 2017.

Mass production of two other models, the Adventure and L300, will follow, he said.
According to Masuko, the stamping facility will increase local content as well as employment opportunities.

He additional local assembly and trim lines would also be in place.

“The Philippines is one of the most important markets for MMC,” Masuko stressed during the briefing.

“Among the members of the ASEAN Economic Community, we see the Philippines as having extremely high potential for growth. I think, indeed, it was very good timing for the government of the Philippines to announce the Comprehensive Automotive Resurgence Strategy Program.”

According to Froilan Dytianquin, Mitsubishi Motors Philippines Corp. First Vice President, the Philippines is the third largest market of Mitsubishi group in the Asean, behind Indonesia and Thailand, and one of the Japanese carmaker’s top 10 markets in the world.

The expansion to the Philippines, Masuko said, is hinged the country’s sustained economic growth, on the back of strong consumer spending and more demand for auto loans.

Spurring auto investments

Through an executive order, the government launched the Cars Program in mid-2015 to offer incentives to carmakers to ramp up production in the Philippines.

The three approved companies would be given around P9 billion each in incentives to produce a minimum of 200,000 units of a specific model over six years, equating to about 33,000 units a year.

The government, in turn, will give monetary incentives to car and car parts makers, who applied for the program, with a budget of P27 billion for the three model units for the first year, which is 2016.

The program aims to elevate the Philippines as a regional automotive manufacturing hub, both car manufacturers and parts makers, by encouraging new investments, stimulating demand, and implementing industry regulations.

According to the Department of Trade and Industry, the program is expected to create 200,000 direct and indirect jobs, boost vehicle-production levels in the Philippines to 100,000 units a year, attract new investments in vehicle parts and components, and contribute up to 1.7 percent of the country’s gross domestic product.

Strong local market

Masuko said the investment is only the first phase in the company’s plans to increase annual production to at least 100,000 units.

This is almost a 43-percent jump from Mitsubishi’s 70,000-unit target for this year.
Masuko said the carmarker’s production plan would generate nearly 9,000 jobs for Mitsubishi in the Philippines.

According to Masuko, the CARS Program can easily make the Philippines a 500,000 to one-million market by 2022, zooming beyond the local auto industry’s 340,000 recorded sales in 2015.

Indonesia sells one million units a year, while Thailand hits 800,000 units annually.

Aside from the actual production and facilities investment, Masuko said the P4.3-billion budget would also include parts supplies from 26 partner-companies that are mostly Japanese parts makers, who are long-time partners of MMC.

The 26 parts makers comprised of 20 Japanese companies and six local suppliers. These include known auto companies Denso Corp., Yazaki Corp., Mitsuba Corp., and Metaltech Ltd.

Masuko said MMPC is aiming for a 25,000 to 35,000 car production in 2017.

Dytianquin said the group’s expansion of their local car manufacturing is primarily to meet the requirements of the CARS Program.

He said this would double MMPC’s employment by the end of the CARS Program by 2022—adding 1,000 more workers to the current 900-plus employees of MMPC.

The MMPC chief added that the Mirage production for the CARS Program would consist of 65-percent sedan and 35-percent hatchback.

Dytianquin said Mirage production is seen to go higher once it is mass-produced in 2017, surpassing its current growth levels of 15 percent to 20 percent yearly.

MMPC has a production capacity of 80,000 yearly—30,000 produced by its 18-hectare plant in Cainta, Rizal, and 50,000 produced by its 21-hectare plant in Sta. Rosa, Laguna.

Aside from MMPC, Toyota Motors Philippines Corp. has expressed interest to join the CARS Program, applying their volume models Vios and allotting more than one-billion-yen investment for the first two years of the program as preparation.

The application submission for the CARS Program will run from January to March 15.

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