Mitsubishi to invest P4.3 billion on CARS participation

TOP MANAGEMENT officials representing 20 Japanese parts suppliers that will help expand Mitsubishi’s production base in the Philippines at a press conference.photos by eugene araneta

MITSUBISHI Motors Philippines Corp. (MMPC) is betting heavily on the Philippines.

As if its continuing investments in the country were not enough, the local unit of Japanese carmaker Mitsubishi Motors Corp. (MMC) recently announced plans of investing a hefty P4.3 billion in its production facility in Sta. Rosa, Laguna, while preparing to participate in the Comprehensive Automotive Resurgence Strategy (CARS) program.

In doing so, MMPC had just reaffirmed its commitment to support the development of the Philippine automotive industry, as the government gears to take advantage of the opportunities presented by the third wave of motorization in the region.

Osamu Masuko, chair and CEO of Japan’s MMC, noted that it was “very good timing for the government of the Philippines to announce the CARS program.”

“We will immediately file an application to the CARS program, and when it is accepted, we are planning to start the production of Mirage hatchback and sedan by early 2017.

“The production site will be in the Sta. Rosa plant where MMPC has started its operations anew from January last year.

“In starting the production of a new model, MMPC plans to invest over P4.3 billion to include a stamping facility in the first phase in order to increase local content … while expanding employment opportunities with the build up of production capacity,” Masuko explained.

OSAMU Masuko: Very good timing

“MMC has been engaged in the production and sales business in the Philippines for over 50 years. The Philippines is one of the most important markets for MMC.

“It is indeed a great pleasure for MMC to be able to contribute to the automotive industry of the Philippines, which is facing a new development phase, and also further make a contribution to the economic growth of the Philippines,” Masuko added.

MMPC plans to tap the fiscal and nonfiscal incentives offered under CARS, which dangles some P27 billion worth of incentives for vehicle assemblers that can produce 200,000 units of a single model over a six-year period.

Production hike

MMPC first vice president for marketing Froilan Dytianquin, meanwhile, disclosed that they expect to start producing here roughly 12,000 units of the Mirage next year, and about 18,000 units of the L300 and Adventure models.

The production will be ramped up depending on market demand.

Dytianquin stressed that the local assembly of the Mirage will complement the existing production in Thailand, where the company currently imports the said model.

Mirage is currently one of the best-selling models of MMPC, with sales reaching 17,000 units last year; while that of the Adventure and L300 hit roughly 7,000 units and 8,000 units, respectively.

MMPC anticipates a 15- to 20-percent increase in the sales of Mirage this year.

Once the CARS program takes off, MMPC is mulling to further hike the production capacity of its facility in Sta. Rosa, Laguna, to 100,000 units.

The local unit’s assembly plant, at full capacity, can produce as many as 50,000 units.

This, however, can be further ramped up, depending on the automotive market growth in the Philippines in the next years.

It was also possible for MMPC to introduce a new model for production, depending on how local demand will shape up.

MMPC is further entertaining the possibility of exporting Mirage from the Philippines should the cost become more competitive compared to the production facilities in the region.

Engaging parts suppliers

To support its planned assembly expansion, MMPC presented the top management officials of 20 Japanese parts suppliers that have decided to penetrate the local market.

These companies, which included Denso, Yazaki Corp., NHK Spring Co. Ltd., Katayama Co., Tokai Rika Co. and Yokohama Rubber Co., are expected to further expand their existing production base and provide technology for local parts makers as well.

“The parts suppliers are aiming to contribute to the development of the automotive industry of the Philippines—just like us—by business expansion in different ways such as the construction of new plants or existing production bases, or the provision of technology to local corporations.

“This time, many parts suppliers will make new investments as well as expand employment in the Philippines. “The Philippines is blessed with a high-quality labor force, good English (proficiency), and a strong CARS program,” Masuko said.

The government issued last year Executive Order No. 182 which provides for the implementation of the CARS program.

CARS is expected to attract more than P27 billion in new parts manufacturing investments, produce at least 600,000 vehicles, generate some 200,000 new jobs, and generate a total economic activity estimated to be worth P300 billion.

The resulting contribution to the gross domestic product is estimated at about 1.7 percent.

With CARS, the Philippines is also expected to cash in on the third wave of motorization happening between 2015 and 2022. During this period, vehicle sales in the Philippines is expected to hit 500,000 units out of the expected regional demand of 3 to 6 million units.