CBUs outnumber CKDs among top 10 PH car brands

The January-October 2017 year-to-date sales reports of over 20 Philippine automotive industry players reconfirm that completely built up (CBU) imports greatly outnumber models assembled locally from completely knocked down (CKD) packs.

The reports also reveal that two Korean brands—Hyundai and Kia—have successfully kept their positions in the top ten while a Chinese brand, Foton, looks ready to join the honor roll despite selling only locally assembled CKDs.

Japanese brands dominate the top 10 where two American brands—Ford and Chevrolet—also compete.

Hyundai of Korea is the only non-Japanese brand to make it to No. 3.

The YTD numbers in the list below come from the car companies themselves, the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI), and the Association of Vehicle Importers and Distributors (AVID).

88 CBU imports

The top 10 brands offer a total of only 11 locally assembled CKD models compared to 88 CBU imports.

The CKDs total will be reduced to 10 when Isuzu stops assembling the Crosswind Asian utility vehicle (AUV) at year-end because starting Jan. 1, 2018, all new vehicles for sale in the Philippines have to be Euro 4-compliant.

The Chinese brand Foton, exclusively distributed by the United Asia Automotive Group, Inc. stands out for selling only locally assembled CKDs.

All seven Foton vehicles are produced at its 11-hectare assembly plant which was inaugurated in February 2016 at the Clark Freeport Zone in Pampanga.

With YTD sales reaching 3,504, Foton is poised to vault into the top 10 list by 2019 given its all-commercial vehicles lineup and the ambitious Build, Build, Build infrastructure program being pushed by the Duterte administration.

Premium brands=zero CKDs

Not surprisingly, the premium European and British brands offer only imported CBU models.

There was a time, though, in the 1990s when the BMW 3 Series and BMW 5 Series were locally assembled for the Philippine market.

American brands Ford and Chevrolet used to locally assemble several models.

Ford Philippines, Inc. began production operations in May 1968 at Sucat, Parañaque, and in 1976 inaugurated a body stamping plant in Mariveles, Bataan.

But in August 1984, Ford unexpectedly ceased its Philippine operations due to the political and economic instability of the Marcos regime.

In 1997, Ford returned to the Philippines, and in September 1999, opened a P4-billion assembly plant in Santa Rosa, Laguna to produce the Ford Lynx, Ranger, Escape, Ford Focus and Mazda3, thousands of which were exported as CBU units from 2002 to 2012.

However, in 2011, Ford sold only 9,788 units although its Santa Rosa plant could produce 25,000 units a year.

In December 2012, citing the “lack of supply base and economies of scale” as the main reasons, Ford shut down its manufacturing operations in Santa Rosa, Laguna.

Chevrolet is another American brand that closed shop several times, first in 1976 as GM Pilipinas due to the enforcement of foreign currency controls and local content thresholds.

Chevrolet resurfaced in 1994 when GM Automobile Philippines was established as the official brand distributor, and continued to be so until 2009.

In 2009, GM closed shop and a new organization, The Covenant Car Company, Inc. (TCCI) led by Alberto B. Arcilla took over as Chevrolet’s exclusive importer and distributor.

TCCI hangs on to 10th place in the top 10 list with the Chevrolet Trailblazer midsize SUV as its best seller.

Summing up

Next year, Toyota Motor Philippines will roll out the full model change 2018 Vios as its commitment in the Comprehensive Automotive Resurgence Strategy (CARS) program of the Department of Trade and Industry. TMP has been assembling the Vios and Innova as CKD models.

Last July, the only other accredited CARS participant, Mitsubishi Motors Philippines Corp., unveiled the first Philippine-made Mirage G4.

The CARS program requires each participant to produce 200,000 units of a passenger car during its six-year model life.

With the new tax reform bill set to impose higher excise taxes on new motor vehicles, the big question is whether the CARS program, despite higher excise taxes, will succeed in its purpose of revitalizing the Philippine automotive industry, and in the process, increasing the number of locally assembled CKDs vehicles versus CBUs.