Vehicle part owners said recently that they are optimistic on the proposed roadmap for the automotive industry.

In a statement, Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP) President Ferdi Raquel-Santos said that starting this year up until 2022, the local production from completely knocked-down (CKD) kits will increase by about 15 percent a year, starting with 90,000 units this year to 350,000 units by 2022.

He also said that they may also start exporting completely-built units (CBU) after three years starting with 12,000 units, and this is expected to grow to 156,000 units by 2022.

”So, by 2022, we are expected to be producing around 506,000 units, the very first time we will breach the half-million mark,” Raquel-Santos said.

According to him, they find the local CKD production badly battered from the increasing importation of brand-new CBU vehicles and the increasing importation of used vehicles by the so-called informal sector over the past few years.

“Last year alone, of the new vehicles registered with the Land Transportation Office, 44 percent were for CBU, an astounding 26 percent from the informal sector and only 30 percent from local CKD production,” Raquel-Santos said.

”In all, the 70 percent of the total new vehicles, there is no local value added in terms of local parts and labor,” he added.

Further, the auto parts group president said that while CBUs grew from 94,000 in 2010 to 98,000 units in 2011, local CKD production dropped from 74,000 to 67,000 units.

”This has proven detrimental to both our local auto assembly and parts manufacturing industries,” he claimed.

Moreover, Raquel-Santos said that the country lags behind its Southeast Asian neighbors in terms of production in 2011, saying that the country produced 65,000 units as compared Thailand’s 1.56 million units, Indonesia’s 838,000 units, and Malaysia’s 534,000 units.

”Even the new kid on the block Vietnam has surpassed us with 100,000 units. But all these are expected to change with the proposed auto industry roadmap to be presented this month to the Board of investments and the Department of Trade and Industry,” he said.

He said that the government cannot allow the auto industry to develop on its own, citing that the auto manufacturing industry belongs to the industrial sector, which accounts for 31.5 percent of the country’s total gross domestic product (GDP).

”With an output value of P368 billion, the auto industry contributes about 12 percent in the industrial sector and 3.8 percent of the total GDP. It supports some 70,000 employees: 30,000 in vehicle assembly including downstream and upstream industries and 40,000 in parts manufacturing,” he added.

Under the proposed auto industry roadmap, by the end of President Benigno Aquino 3rd’s term in 2016, production would increase output to 213,000 units and domestic CKD sales to 195,000 units. Also, the local content of vehicles assembled with be over 40 percent and vehicles exports of about 18,000 units and parts shipments will reach $4.8 billion.

By 2022, production output would reach 506,000 units, domestic CKD sales 350,000 units and exports of vehicles and parts would reach P7 billion.

Cost of production
In the meantime, Raquel-Santos said that there is one pressing matter that the auto and parts manufacturing industries and the government will have to address.

“Our cost of locally assembling a vehicle is now about $1,800, or 14 percent higher than our Asean [Association of Southeast Asian Nations] counterparts. To be competitive, we have to bring this down. This is where we immediately need government support in terms of viable incentives in a rehabilitated Motor Vehicle Development Program, reduction in VAT [value added tax] and excise taxes, tax credits for CBU and parts exports and the liberalization of investment hurdles,” he noted.

Furthermore, Raquel-Santos said that they are very optimistic “though that all these concerns will be addressed and the proposed roadmap is approved, legislated and implemented in the soonest possible time.”

”Because other than these, there are other things that are needed as proposed in the roadmap such as product testing facilities, joint ventures and transfers of technology with foreign principals, technology and management upgrading with corresponding funding, development of product technology, common development facilities, an Automotive Excellence Center, adoption of a national standards and acquisition of international quality standards like ISO and TS, among others,” he added.