Mitsubishi PH gets ready to play a bigger role

MANILA, Philippines–Imagine the economic impact and reach of Mitsubishi Motors Philippines Corp.’s (MMPC) newly inaugurated headquarters and manufacturing plant in Sta. Rosa, Laguna, operating at full capacity.

As soon as the automotive industry masterplan called the Comprehensive Automotive Resurgence Strategy (CARS) program gets underway, MMPC will set up a stamping facility worth P2 billion. Included in this package is the construction of a new multicolor paint shop employing the advanced and environment friendly 3-coat-1-bake method worth P500 million.

This additional investment is on top of the P3 billion the company already spent to acquire and refurbish this 21.4-hectare former facility of Ford Philippines.

More importantly, the new plant is expected to employ up to 1,150 skilled workers and professionals over the next six years.

Commitment

According to MMPC president and CEO Hikosaburo Shibata, the inauguration of MMPC’s new plant reflects the company’s commitment to continue vehicle manufacturing operations in the Philippines while at the same time prepare for further business expansion with the projected rapid increase in vehicle demand in the coming years.

MMPC began its operation in 1964 and is now the longest-staying automotive company in the Philippines. It is also the first automobile manufacturer in the country to attain cumulative production of 500,000 units.

Last year, MMPC remained the second-most profitable automotive company in the country, enjoying an 18.6-percent market share  with 50,085 vehicles sold.

MMPC this year is targeting 62,000 units.

Regional manufacturing

The fiscal and nonfiscal incentives that CARS promises aims to transform the Philippines into a regional auto manufacturing hub—much like Thailand and Indonesia—by encouraging existing assemblers to ramp up production and at the same time draw new carmakers to set up their factories in the Philippines.

The urgency for CARS program’s issuance has been emphasized by no less than the chair of Mitsubishi Motors Corp. (MMC), Osamu Masuko, who personally witnessed the inauguration.

“The Philippine market is expected to show the most growth among all the countries in the Asean, which is the most important market for our company. Therefore we made the big decision on the new factory here. We greatly expect the Philippine government to take some initiative to sustain the growth of the automotive industry, especially local production business,” said Masuko.

The industry set a sales milestone when it sold 269,841 last year. While local players target to sell 310,000 vehicles this year, such figure pales in comparison to what some of the Asean members are already enjoying, thanks to incentives similar to what CARS will provide.

A few years ago, Thailand granted direct tax incentives to car buyers, while Indonesia provided direct assistance to car companies. Thanks to such laws, Thailand is now producing over two million units a year (domestic sales have already reached 1.4 million units), while Indonesia makes around 1.2 to 1.3 million units a year.

Malaysia, our closest competition, already sells 800,000 units a year.

The implementation of CARS is expected to catapult MMPC production to new heights. At the moment, the company is just dependent on market demand. Last year, MMPC was able to produce 17,000 units (Adventure Asian utility vehicle and L300 van combined). Without the perks that CARS will provide, MMPC could only expect to improve this figure to 18,000 vehicles this year.

Production capacity

MMPC’s new production facility has the capacity to produce 50,000 units per year, with an option to increase this capacity to 100,000 vehicles. The company’s old plant in Cainta, Rizal, could only produce a maximum 30,000 units.

Once the CARS program is in place, Masuko said, they plan to add the B-segment compact passenger vehicles Mirage and Mirage G4, perhaps by 2016.

“Physically, the Sta. Rosa plant is more capable of assembling and handling a larger volume of vehicles which we will need in the future,” Shibata said, adding that by 2020, the company is eyeing a 20-percent market share and a sales reach of 100,000 units.

Stiff competition

Masuko explained that the Philippines is facing stiff competition on quality and cost issues with other Asean countries. In order to win over competition, he stressed the need for government to issue an enabling policy to develop the domestic industry. He believes that only when such government policy is put in place will production volume begin to increase.

MMPC officials believe it would be difficult to justify ramping up production capacity in the country if out of the almost 270,000 unit vehicles sold last year, only 60,000 to 70,000 units are locally assembled on CKD basis while the rest are imported.

President Aquino, during the event,  assured that the government will continue to do its part to fulfill MMPC’s goals. “To stimulate the Philippine automotive industry, our government has likewise continued to provide incentives in the form of income tax holidays and reduced taxes and duties, among others. This, together with other endeavors, seeks to formalize our drive and our approach to encourage more investments into automotive assembly and parts manufacturing, in order to move the Philippines up the value chain and create even more opportunities for Filipinos.”