Extension of CARS program still under study

The Department of Trade and Industry (DTI) said it was still assessing whether the government would extend the Comprehensive Automotive Resurgence Strategy (CARS) program, saying it was awaiting proposals from the private sector.

Speaking to reporters earlier this week, Trade Undersecretary Ceferino Rodolfo said the matter was being studied following discussions between them and representatives from the two participanting firms, Toyota Motors Philippines Corp (TMP) and Mitsubishi Motors Philippines Corp (MMPC).

“The [Trade] Secretary has met with the two CARS program participants on how much longer they need so that they can be given a reasonable amount of time of extension,” Rodolfo said, adding that the two vehicle firms were still finalizing their proposals.

Rodolfo said they were expecting to see what benefits the two automobile companies could offer in exchange for the time extension in complying with the sales volume target.

The two car companies qualified for incentives under the CARS program, which was signed in 2015, under an arrangement that both firms will locally produce 200,000 units of the Toyota Vios and the Mitsubishi Mirage models in a period of six years.

The Philippines government allotted P27 billion in fiscal incentives under the program.

“The DTI fully understands the impact of the pandemic on all industries, particularly on the automotive industry. The demand was really hit as well as their supply chain,” the trade official said.

“We also recognize that the CARS program participants have already complied with their investment commitment. So, it’s just really a question of not being able to hit their volume commitments due to the market downturn,” he added

Rodolfo said that the previous plan during the past administration was to extend it by another three years, but that concerns have been raised on where to “anchor” the extension.

The trade official said that it wasn’t finalized whether the extension will be anchored to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act or to an executive order from the Board of Investment, one of the investment promotion arms of the DTI.

On the issue of a third slot under the CARS program, which is eyed for the electric vehicles industry, Rodolfo said that they are working toward its inclusion in an industry road map that they are looking to finish by the first quarter of next year.

“The discussion on the third CARS slot would have to be consistent with the EVIDA (Electric Vehicle Industry Development Act) law,” he said, referring to the legislation which lapsed into law in April of this year.

In aid of the electric vehicle industry, the National Economic and Development Authority said on Thursday that it has endorsed an executive order to President Marcos which will implement a zero tariff scheme on certain electric vehicles, as well as their parts and components for a period of five years.