Toyota seen to ride on PH growth

MANILA, Philippines—The group of taipan George Ty expects its automotive business under Toyota Motor Philippines (TMP) to get a big boost from the rise of the domestic economy as per capita gross domestic product (GDP) is seen to hit $3,000 in the next few years.

GT Capital, the parent company of TMP, is ready to ramp up manufacturing output and expand its distribution network to meet the “motorization” trend brought on by an expanding economy, GT Capital president Carmelo Bautista said in an interview last week.

During a briefing on GT Capital’s first quarter results, Bautista said that, based on the experience of other emerging markets, demand for cars would rise significantly whenever the per capita GDP breaches the $3,000-mark.

As personal incomes rise, more people will be able to buy cars.

“You can bet that those who buy motorcycles can buy cars,” Bautista said.

Increasing consumer affluence may also drive demand for costlier vehicles like sport utilities.

Based on the latest government data, Philippine per capita GDP stood at $2,613 as of end-2012 at current prices.

“We’re almost there. I’m sure it will happen in the next three years,” Bautista told reporters.

Bautista said TMP, a partnership with Japan’s Toyota Motor Corp. and Mitsui & Co. Ltd., could easily mobilize a higher volume of production in its manufacturing hub in Santa Rosa, Laguna, which was set up in 1995. TMP is the biggest automotive company in the country, with one out of every three cars on the street carrying the Toyota brand. The plant in Laguna produces the Vios and Innova models.

“We are not at full capacity in the plant. We’re doing two shifts, but we can do three shifts. That should be easy to mobilize,” Bautista said.

TMP can produce 30,000 cars a year at full capacity. At present, it runs at 85 percent capacity.

The low car penetration in the country is an opportunity for TMP, Bautista said. Currently, there are only 11 cars for every 1,000 people in the Philippines compared to 75 in Bangkok, 50 in Indonesia and 200 in Malaysia, he said.

Further segmenting TMP’s 34.8-percent overall market share in the Philippines, Bautista said the company was the leading player in passenger cars with a 30.8 percent market share because of Vios. It is also number one in commercial vehicles with a 37-percent share because of Innova.

Bautista said TMP had the distinct advantage in terms of dealership and availability of original parts and supplies.

“Toyota has this process of maintaining original parts availability even for models that have been discontinued for 15 years and therefore with parts availability, resale value is at a premium, and that accounts for a strong loyalty,” he said.

Another interesting development for TMP, Bautista said, is the opening of TMP School of Technology at the Laguna complex this September. TMP has spent P400 million for the project and another P150 million will be deployed this year, he said.

Bautista said that its corporate social responsibility effort “is also very good for business.”

The technology school will recruit and train Filipinos “to be topnotch technicians in Toyota technology,” he said.