Toyota Motor Philippines Corp. (TMP) is setting aside “more than a billion Japanese yen” or over P400 million for the first two years of its participation in the government’s Comprehensive Automotive Resurgence Strategy (CARS) Program.
Under Executive Order 182, the program seeks to support three model vehicles for mass production of not less than 600,000 units within a six-year window by allocating P27 billion for the first year. It is expected to translate to a P9 billion production fund for each unit that qualifies.
Satoru Suzuki, TMP’s new president, said the carmaker was applying for the CARS Program, noting that the company will be placing “more than a billion yen” in the planning stage during the first two years of the six-year program.
“Of course, we’ll apply. We’re ready to apply. Soon,” Suzuki told reporters at the sidelines of the TMP Media Appreciation Night late Wednesday.
“More than a billion yen maximum. As the program requires some additional parts, localization, so we have to meet such requirement. Then it needs investment. So we are putting in a lot of money,” he added.
TMP Vice Chairman Alfred Ty earlier said that the firm would register the Vios as the model unit for mass production under the program.
Suzuki said the ¥1 billion would not cover the production stage but only for the initial planning for parts manufacturing as well as plant expansion and adjustments.
TMP First Vice President Rommel Gutierrez said TMP would be in the preparation stage in the first two years before actual production starts in the third year.
“The incentives will actually start after we produced 100,000 units. After three years, theoretically,” Gutierrez said.
In terms of output for entire Toyota model portfolio in the Philippines, Suzuki is looking at a 10 percent increase this year from nearly 50,000 last year.
With 200,000 more Vios units under the CARS Program—which can be reached in “as early as five years”—Gutierrez said TMP expected the ratio of locally manufactured units or completely-knocked-down (CKD) assemblies to surpass the share of imported units or completely-built-up (CBU) cars.
“We try to maintain a 60:40 ratio, in favor of CBUs. But with CARS, we simply hope to increase the CKDs. The more CKDs, the better. But it depends on the market. Even if we have 200,000 CKDs, if the market really demands more, requiring CBUs, then it would even out,” Gutierrez said.
Suzuki has been vocal about hitting the sales target of 150,000 units this year – which is higher than the vice chairman’s earlier forecast of 137,000 and the 125,000 units the company sold in 2015 – saying it is “dependent on market growth.”
TMP expects to corner “40 percent” of the Philippine market this year, the highest projected market slice for the carmaker, factoring in both locally made and imported cars.
The group also sees the industry sales this reaching 370,000 units from 320,000 last year, which consisted of 288,000 units of locally manufactured vehicles and roughly 40,000 of imported cars.
To date, TMP has reached 1 million in cumulative car sales since it was established 27 years ago. It attributed the phenomenon to the consistent “double digit growth in the past five years” on the back of the bright performance of the Philippine economy.