Mitsubishi, Toyota keep steady pace

A MOTORSHOW offers simultaneous and parallel activities and sights. Plan your visit well.

LOCAL CARMAKERS Mitsubishi Motors Philippines Corp. and Toyota Motor Philippines Corp. are well poised to meet their commitments under the government’s Comprehensive Automotive Resurgence Strategy (CARS) Program, particularly in increasing the volume of vehicle components to be sourced from local suppliers.

MMPC president and CEO Yoshiaki Kato said they have already begun rounding up the potential local suppliers for the Mirage model, which was enrolled under the CARS Program.

The company reportedly has more than 70 existing content suppliers composed of homegrown and foreign firms. However, the process of selection can be tedious, as they have to undergo certain selection procedures for quality and standard checks.

MMPC, Kato added, was also matching some of the Japanese suppliers to local companies to enable it to meet the requirements set by the CARS Program—a stimulus package that offers as much as P27 billion in incentives provided that an automotive firm produces 200,000 units of a single model over a six year time frame and increases the local content for the said nameplate.

On top of securing local suppliers, MMPC has also invested P2 billion in a press stamping facility, which formed part of the company’s P4.3 billion committed investment under the CARS Program.

This reportedly was as a milestone for MMPC as this is the first time that the metal stamping process shall be introduced to the company’s manufacturing process after more than five decades of operations in the Philippines.

Increasing local content

MMPC first vice president Dante C. Santos however declined to cite up to how much the local content of the Mirage will be, noting that they will follow what is required under the program.

The implementing rules and regulations of the CARS Program provides a list of compulsory parts that assemblers will have to produce or source from the country.

“We are trying to look at the highest number of content. We have to start producing with a low local content in the first year. Then we will be reducing import as we bring in more local parts. It’s like a transition,” Santos explained.

“We are negotiating with as many as we can, and all of them have to be local. The foreign supplier must tie up with a local firm because the technology (that foreign firms have) cannot be produced here fast so you have to being them under a technical licensing agreement. We are now meeting with the Board of Investments with our plans,” he added.

At present, MMPC produces the Adventure and L300 at its Laguna facility. The Adventure has a local content of 70 percent, reportedly the highest in a vehicle model in the Philippines.

Current calculations, according to Santos, showed that the Mirage can “also reach that 70 percent local content level. But this took decades (in the Adventure) to achieve so it would be hard to say that we would have the same content (for Mirage) after the six years under the CARS Program.”

Meanwhile, TMP president Satoru Suzuki said they are on track to start by 2018 the production of the Vios, the model currently enrolled under the CARS Program.

They have not encountered any problems with regards to their local suppliers nor will they be bringing additional suppliers from Japan, he added.

“We have no plans to bring new Japanese suppliers. We will request existing suppliers here to produce new parts to meet requirements. Some parts will also be produced in-house,” Suzuki said in a separate interview with the Inquirer.

Consistency needed

Recently, however, there had been reports that the Department of Trade and Industry was considering to tweak the requirements under the CARS program to accommodate a third player.

This was met with much resistance from the two current participants, prompting an industry leader to urge the government to observe a “consistent policy implementation” of the program.

Rommel Gutierrez, president of the Chamber of Manufacturers of the Philippines Inc., said it would be unfair to existing participants if the provisions under this stimulus package will be tweaked in the middle of the game in the form of downscaling the requirements and incentives under the CARS program to fill in the third and last slot for the said incentive scheme.

According to Gutierrez, the presence of the two participants, namely TMPC and MMPC can already be considered “substantial compliance” since these two companies will be infusing an initial P8 billion to improve their respective assembly plants.

Both companies have likewise committed not only to produce 200,000 units each for a single model over a six-year period, but also to increase local content of the Vios for Toyota and Mirage for Mitsubishi.

“Our applications were filed in accordance with the requirements of the executive order and its implementing rules and regulations.

“We have set our plans and targets based on the conditions of the IRR. I think the EO and the IRR are clear enough as far as targets and conditions are concerned.

“If you change the conditions, that’s changing the rules midway. Even before, we have been saying that you need consistent policy implementations,” said Gutierrez, who also serves as first vice president of Toyota.

Third player

The DTI, however, is eyeing one of the biggest automotive importers in the country to be the third participant in the CARS program, after the company was reported to be looking at the Philippines as a possible production hub in the region.

“Given the strong growth of the economy and the continued consumer confidence as indicated by purchases of consumer durables and vehicles, (the Philippines) has attracted the serious consideration of global players who are already present in the country but in a limited way, meaning through marketing, selling and distribution,” a source privy to the matter told the Inquirer.

The source noted that the industry player wanting to set up an assembly operations in the Philippines can be a likely candidate for the government’s CARS Program since the said company, given its strong domestic sales, could rival and compete against the Japanese automotive brands dominating the local market.

“I want that company to apply for the third slot under the CARS Program because I’ve seen their commitment. They are engaged only in the import and distribution of vehicles, and now they are (mulling) to assemble here.” The source, however, declined to identify the said vehicle importer.

During the 2016 Manila International Auto Show (MIAS) held in April this year, Hyundai Asia Resources Inc. (Hari), the exclusive distributor of Hyundai vehicles in the country, reportedly announced that the Philippines has been shortlisted by the parent firm as among the possible future sites for either an assembly operations or an automotive parts manufacturing facility.