While there is optimism on the growth of the Philippine market for vehicles, the number of vehicles assembled in the country is hardly growing or is on a decline.
During a roundtable discussion with The Manila Times editors on Wednesday, Takashi Tomita, executive vice president of Isuzu Philippines Corp. (IPC), noted that local vehicle sales, including trucks assembled in the Philippines, had been growing by 20 to 30 percent annually in the past three to four years.
“Last year, the market size reached 270,000 [units],” he said, adding that volume sales this year will reach 310,000.
Last year was also a good one for IPC, with the company selling about 14,000 units, or 20 percent more compared to 2013, with the Crosswind Asian utility vehicle accounting for 5,000 units, the D-Max pickup 3,800 units, the Alterra and Mu-X sports utility vehicle 2,000 units and trucks 4,000 units.
For this year, with domestic vehicle sales expected to reach 310,000 units, IPC sees its sales jumping to 18,000 units with the Crosswind leading the charge with 4,000 units, D-Max 4,000 units, Mu-X 6,000 units and trucks 4,000 units.
Even if the domestic vehicle market is growing, according to Tomita, much of the demand is met by imported completely built-up units (CBUs) instead of vehicles assembled in the Philippines with some local content.
“Sales volume increased very much. But the local production volume has stayed at the same level, 70,000 to 100,000 [units]. The rest is imported,” he said, adding that most of the small cars being sold in the Philippines are manufactured in Thailand and Indonesia.
Isuzu still assembles the Crosswind and the D-Max at its facility in Santa Rosa, Laguna.
Tomita said the government should help existing vehicle assemblers in the Philippines cope with the cost of manufacturing vehicles in the country, because the assemblers have made big investments locally to put up facilities. Isuzu, over its 17 years of doing business in the Philippines, has invested a total of P1 billion. IPC currently employs 500 workers.
He added that if local assemblers face challenges in terms of costs, they might have no choice but to transfer their manufacturing facilities to other countries like what Ford Philippines did a few years ago.
Tomita said that besides improving the country’s infrastructure system, which includes power, incentives to local assemblers should be improved, citing the case of Thailand.
Based on the website of the Thailand Trade department, Bangkok extends the following incentives to car manufacturers and parts suppliers: a five-year 50-percent reduction of corporate income tax on net profit following the expiration of the corporate income tax holiday; 10-year double deduction of transportation, electricity and water supply costs; and deduction from net profit of 25 percent of investment in infrastructure installation and construction costs.