PH car market growing, but assembly declining

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PIT STOP  Isuzu Philippine Corp. (IPC) Executive Vice-President Takashi Tomita (second from left) discusses issues related to the country’s vehicle industry during a roundtable with The Manila Times on Wednesday. In photo are The Times President and Chief Executive Officer Dante Ang 2nd (second  from right), Motoring Editor Anjo Perez (right), Deputy Motoring Editor Conrad Carino (center), IPC Supervisor for Advertising Maylyn Formento-Gimutao (third from left), and Kristine Yuonne Linchangco, IPC corporate communication staff (extreme left). PHOTO BY MELYN ACOSTA

PIT STOP
Isuzu Philippine Corp. (IPC) Executive Vice-President Takashi Tomita (second from left) discusses issues related to the country’s vehicle industry during a roundtable with The Manila Times on Wednesday. In photo are The Times President and Chief Executive Officer Dante Ang 2nd (second from right), Motoring Editor Anjo Perez (right), Deputy Motoring Editor Conrad Carino (center), IPC Supervisor for Advertising Maylyn Formento-Gimutao (third from left), and Kristine Yuonne Linchangco, IPC corporate communication staff (extreme left). PHOTO BY MELYN ACOSTA

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.

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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.

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4 Comments

  1. We dont have enough power supply for the industrial sector , aside from we are in asia as the no.1 with the high cost rates of power. Infrastructure design and quality was very poor.
    Power and good infrastructure like roads and highway are very important for the investor. Kakaunti ang nakikinabang sa sinasabi nitong administration na umuunlad ang economy. Capitalism is for the capitalist not for the people…

  2. I have pointed all of these to a classmate at the BOI more than five years ago but he says that the problem is in congress. He says that whatever fiscal incentives that are to be given will have to be granted by congress. But I guess, BOI does not have to wait for congress. Why did it took GMA so long to sign a vehicle manufacturing roadmap – or she didn’t sign it? I guess, with simyon clueless on what to do, surely, the local automotive industry will just have to wait for a year more until the next President comes in. But more than an automotive industry rationalization plan, it has to be more inclusive that it covers all land-based vehicles. Rather than just be for the service of motorists and the riding public, the next President will gear the development to include incentives for manufacturers of land-based vehicles for the police and the military.–mc

    Will the PCOS machines allow us to have a new and good president?

  3. Mark mcaneny on

    Australia just lost its car industry and once its gone you will never get it back. On labour costs The Phillippines is competitive pero electricity costs are much higher than in Thailand , and with those incentives offered The Philippines should do something before the opportunity to develop a good car industry is gone forever.
    I see a country with enormous potential in so many ways , but in almost every field Thailand is doing so much better, and a rising Vietnam is also now becoming a major competitor.
    Economic growth is just a number unless it creates jobs and builds equity in a society.
    God bless The Philippines.

  4. This is the problem with our politician they talk about introducing a bill to give incentives for foreign investors to invest in our country but it is all talk no action.Economy grows in number but not the numbers for jobs.