PH can still become major player in region’s auto industry, study shows

SANTA ROSA, Laguna— The Philippines could hit an annual car production of one million units by 2027, Trade and Industry Secretary Ramon Lopez said, citing a study done by a Japanese government agency.

Speaking during the inauguration of Mitsubishi Motors Philippines Corp.’s (MMPC) stamping shop facility in Laguna, Lopez said a study of the Japan International Cooperation Agency (Jica) suggested that such annual production target would be possible nearly a decade from now.

He said the country could become a major player in the industry by building on the gains of the CARS program, which is an ongoing multibillion-peso government initiative that picked two carmakers to produce locally automobiles by the hundreds of thousands.

“We are looking into a study of the Jica Team suggesting a one million units per year production target by 2027. By building on our CARS experience, this ‘Million Unit’ project can turn the Philippines into a major player in the region’s automobile industry,” he said.

At the sidelines of the inauguration, Lopez told reporters that there needed to be a big demand in the local market to encourage car manufacturers to set up shop in the Philippines.

“For that to happen, the demand in the local industry should increase so that more manufacturers would be encouraged to build here, making the country their production base,” he said.

He didn’t discuss how the government would be able to help the local industry reach the target. However, data suggests that the industry may still be far from being able to produce that number of cars every year.

According to the Asean Automotive Federation, the Philippine automotive industry produced 141,252 units last year, which is a 20.9 percent increase from 2016.

Moreover, the CARS program may be a good example of how challenging it is to commit to producing a big production volume. The country’s top selling carmakers—MMPC and Toyota Motor Philippines Corp. (TMP)—committed to locally produce at least 200,000 units each within a six year period.

The program was previously planned to have P27 billion worth of budget, which would be equally distributed to three carmakers. These firms are supposed to have a combined output of at least 600,000 units.

However, after some time now, only MMPC and TMP were able to commit to the program’s strict requirements, leaving the government no other option but to earmark the remaining P9 billion allocation to a different manufacturing program.