Toyota to double PH production by 2020

TOYOTA Motor Philippines (TMP) is gearing up to sustain its strong performance over the next five years, as it targets to almost double its vehicle sales to about 200,000 units by 2020 and retain its market leadership in the local automotive sector.

For 2015, however, TMP has opted to be more conservative in its performance, forecasting only a 4 percent growth in vehicle sales to 110,000 units from the 106,110 units sold in 2014.

TMP president Michinobu Sugata said the automotive firm wanted to focus more on its after sales service, given the growing number of Toyota vehicle owners in the country.

“We will try to focus on after sales service this year because last year, we received 737,000 units for after sales. So in order not to sacrifice our customer satisfaction, we decided to put more focus on after sales enhancement this year rather than sales,” Sugata explained. “There are nearly one million Toyota vehicles on the road due to [rising] car sales, expansion of dealer network, and attractive products and services.”

“This is a transition year for Toyota. Looking at growth, at our midterm goal for sales by 2020, we’re going to aim for 200,000 units, and that’s more or less 40 percent of the market. In order to reach that number, we have to strengthen our fundamentals. Of course, after sales service capacity expansion first. We’re going to expand the dealer network with 10 new dealerships. Last year we had 45, and this year we are aiming for 55 dealers nationwide. Most of the expansion will be done on the provincial side,” Sugata further noted.

The TMP chief admitted that by having this focus, vehicle sales will be affected this year, and most likely the company’s market share, which may see a slight decline this year.

There will also be a lesser number of launches for model changes, the first of which was held Thursday night, for the all new Alphard. Sales for the third generation Alphard, which retails for over P3.2 million, is expected to average about 20-35 units a month, up from 17 units for the previous generation. Initial orders are seen reaching 40-50 units, Sugata added.

Profitability, however, will not necessarily be affected because sales of parts are likely to increase and will make up for the lower volume of cars sold.

Sales of automotive parts are projected to increase by 15 percent this year. Last year, auto parts sales comprised about 20 percent of the company’s P100 billion in revenues.

Sugata further noted that a bigger focus on after sales service was meant to ensure that the company will be equipped with the expected growth in the Philippine automotive sector, where sales are expected to reach 500,000 units by 2020.

To cater to an expected surge in sales, TMP plans to roll out a P2.5-billion capital outlay program this year to prepare for a model change of the Innova. This expenditure will be similar to the over P2 billion spent for the model change  of the Vios, Sugata said.

The planned capital budget, which has yet to be approved by TMP’s parent firm in Japan, will be used to speed up the assembly line. Last year, TMP was able to produce a record  41,644 units, and expects further increase in production to 43,000 units. However, the actual capacity of the plant was only 35,000 units, which meant that workers worked overtime or on double shifts.

“Our production capacity was not enough at 35,000 units. But we produced 41,644 units last year by rendering two [additonal] hours each day. So as we expect a moderate increase this year, we have to expand production capacity a bit to accommodate [the increase]. Otherwise, our workers will have to work three or four hours overtime or two shifts. We may hire more workers. At the moment, we have 1,500 people at the factory,” he added.

On another development, Sugata said they are still awaiting the issuance of the Philippine automotive industry roadmap, which he stressed was “indispensable” for setting the company’s mid-term manufacturing goals.

“We are optimistic that the Department of Trade and Industry’s comprehensive program for auto manufacturing industry will jumpstart broad based industry growth, especially in the parts manufacturing sector and auto supporting industries,” he said.

“The passage of the Philippine Auto Roadmap comes at an opportune time when regional competition is expected to be more intense as the Asean Economic Community integration commences this year. Under a highly competitive economic region, the auto roadmap will be vital in stimulating higher growth and expanding the domestic market,” Sugata added.