Toyota Motor Philippines Corp. (TMP) has committed to pour in additional investments for its operations in the country as it prepares to apply its Vios model under the government’s Comprehensive Automotive Resurgence Strategy (CARS) Program.
The additional investments would enable the company to ramp up production of the Vios at the company’s assembly plant in Laguna to at least 33,333 units a year from the current 26,000 units, raise the local content to 50 percent from the existing 40 percent and implement a full model change for the Vios, TMP president Michinobu Sugata explained on the sidelines of the company’s one-million sales milestone celebration Thursday night.
Sugata, however, declined to disclose the company’s proposed investments, which would be aimed largely at further boosting its Laguna plant’s production capacity, as they have yet to seek approval from headquarters in Japan. He noted that the previous model change for Vios, for instance, entailed a P2-billion investment for the company.
The TMP chief admitted that the CARS Program, which dangles some P27 billion worth of incentives to local vehicle assemblers, posed “very strict” and challenging requirements particularly in terms of the volume. The program provides that incentives, including a $1,000 tax incentive per unit, would be given if a local vehicle assembler could produce 200,000 units over the next six years, translating to a yearly production of at least 33,333 units, Sugata explained.
“The volume requirement is very tough but at this moment, as per our sales, we will try it with the Vios. If the government sticks to the 200,000-unit production over the next six years, it will be difficult for the Innova. But we believe we have a potential with the Vios,” Sugata said.
“That 33,333-unit production will cater only for domestic requirements. Last year we produced 26,000 units of the Vios, so probably in the near future, we can increase that capacity to 33,333 units at least. We think we have a chance as [the Philippines moves toward] motorization,” he added.
Sugata added that the $1,000 tax incentive for each unit produced under the CARS program would go a long way to improve the competitiveness of TMP’s assembly operations compared to their counterparts in the region.
Under the CARS program, the Philippines expects to attract more than P27 billion in new parts manufacturing investments, produce at least 600,000 vehicles for the three models that will qualify for the program, create 200,000 new jobs and generate a total economic activity estimated to be worth P300 billion within the six-year life of the program. The resulting contribution to gross domestic product (GDP) is estimated at about 1.7 percent.
TMP celebrated on Thursday night the company’s one-million-unit sales milestone. About half of the one million vehicles that TMP sold since it started operations in 1989 had been produced in the company’s previous Bicutan assembly plant and the existing facility in Sta. Rosa, Laguna.
To date, the Toyota Group has invested a total of P36 billion in the country since 1989 and has remitted a total of P174 billion in taxes and duties to the national government. Its export suppliers have generated $11 billion in earnings since 1997.