TRADE SECRETARY Ramon M. Lopez said that car companies’ Philippine operations can be cost-competitive with incentive programs, after the closure of Honda Cars Philippines, Inc.’s (HCPI) Laguna facility raised questions about domestic manufacturing.
“If they participate in some programs or register for some incentives, pwedeng maging cost-competitive din sila (they can become cost competitive). So iba ‘yung magiging decision nila (And their decision might have been different.),” he told reporters on Monday.
The Comprehensive Automotive Resurgence Strategy (CARS) program offers fiscal support to car companies that invest in domestic production and commit to certain production volumes over six years. Honda was not a participant.
The two biggest car companies by market share — Toyota Motors Philippines Corp. and Mitsubishi Motors Philippines Corp. — have availed of the state support.
Mr. Lopez said that global headquarters of automotive companies make decisions to increase or cut volumes in certain locations, right down to which model is produced where.
“It could also be — dito namin lagay lahat ng production ng ganitong unit. Talagang lalaki ‘yung volume nila and that can be a decision of the company,” he said.
(They could also move the production of certain units in a given country. Their volume there will grow and that can be a decision of the company.)
“Toyota, Mitsubishi… are not leaving because they believe they have so many models, meron silang mas (they have more) profitable models that can help the overall profitability of the operation.”
Following a meeting with HCPI, Mr. Lopez said the decision to close was made by Honda headquarters in Japan after a global slowdown in the auto industry.
Honda had a 5.5% market share in the Philippines last year, with sales falling 12.7% to 20,338 vehicles.
Overall vehicle sales rose by 3.5% to 369,941 units last year, according to the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association (TMA).
This signalled a slight recovery after higher excise taxes caused an industry slump in 2018, with total sales falling 16% to 357,410 units.
Mr. Lopez said that the government plans to develop a manufacturing policy that gives preference to locally-manufactured products.
“If you’re talking let’s say of government projects, government-funded, ‘yan ‘yung mga possible measures na pwedeng gawin (that’s what can be done).”
He said the government is developing a campaign to use local products like cement and steel for its infrastructure projects. — Jenina P. Ibañez