Modernized PUV maker may win CARS incentives

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AUTOMAKERS showcased their proposed replacements for the jeepney as the government, gearing up for a public utility vehicle (PUV) modernization program, said it may offer the third slot in an automotive manufacturing incentives program to a PUV manufacturer.

Trade Secretary Ramon M. Lopez told reporters during the launch of the first Philippine Auto Parts Expo (PhilAPEX) that the Department of Trade and Industry’s (DTI)Comprehensive Automotive Resurgence Strategy program (CARS) may take in as an effective third participant the maker of a modernized PUV.

The first two slots in the CARS program, which is designed to encourage local manufacturing of cars, have been awarded to Mitsubishi Motors Philippines Corp. and Toyota Motors Philippines Corp.

The CARS program grants P27 billion worth of incentives to three auto companies to boost domestic vehicle production to 700,000 units by 2022 and steer the industry away from importing Completely Built Up units in favor of Completely Knocked Down units which are assembled locally, providing jobs and income for workers.

“Mitsubishi and Toyota — with their respective participating parts makers — have put in over P11.2 billion in new assembly facilities, mandatory body shell and large plastic parts (making facilities)…  Of this amount, P9.1 billion is eligible for fixed investment support, subject to audit.” Mr. Lopez said in his opening remarks.

With the third slot remaining unfilled, Mr. Lopez said a maker of modernized PUVs may end up capturing the incentives budgeted for the third participant.

“To further push the automotive industry’s resurgence, DTI has decided to shift the unsubscribed third slot budget under the program to support the local manufacturing of replacement vehicles for DoTr’s (Department of Transportation’s) Public Utility Vehicle Modernization Program,” he said.

“This is because the market volume requirement of over 200,000 replacement PUV units presents an opportunity to jumpstart the development of the country’s commercial vehicle sector.”

“In the wake of this decision, the proposed eco-PUV program will feature some 15 prototypes developed by potential participants that adhere to Philippine National Standards.”

Hino Motors Philippines Corp. Chairman Vicente T. Mills, Jr. said that the DoTr has asked the company to produce by December 150 units of its modern PUV prototype, the N04C, which is compliant with the Euro 4 emission standard (model N04C). However, Mr. Mills added that the company has only committed to 20-30 units.

The Department of Transportation’s PUV Modernization Program is seeking to phase out traditional jeepneys in favor of more eco-friendly alternatives featuring global positioning systems, closed-circuit television systems to monitor passengers and the driver, and speed limiters.

Hino Motors has its own plant in Laguna. Its prototypes are expected to cost P1.4 million-P1.6 million.

Once implemented, PUV operators will have to re-fleet with modernized units to renew their franchise.

Mr. Lopez told reporters that opposition from operators and the PUV sector is expected at first, due to financial concerns.

“Right now, the jeepneys are probably owned by the operators or by the drivers themselves. Obviously, there will be financial support because we know their limitations otherwise the program will not be successful,” he added.

The government has said it will support re-fleeting via the Development Bank of the Philippines, with financing schemes that will feature a 5% down payment and a 6% interest rate, payable within seven years.

“This is a work in progress and a lot of government financial institutions are willing to help. There are schemes that will make the transformation lighter, obviously to make it more acceptable but it is the drivers themselves, the riding party will enjoy the comfort of commuting.”

PhilAPEX, a joint project of the Board of Investments and the Philippine Parts Makers Association, Inc., showcased local manufacturers of car parts and about 16 prototypes of modernized PUVs from various auto companies. — Anna Gabriela A. Mogato