Toyota fears of failing to hit production commitment

Toyota Motor Philippines (TMP) said it might fail to keep the end of the agreement it entered into with the government in 2016, when the market was still promising and the company agreed to make about 200,000 cars here in exchange for P9 billion in fiscal support.

During an online press briefing on Thursday, TMP first vice president Rommel Gutierrez said the company might not be able to fulfill its commitment under CARS, which stood for Comprehensive Automotive Resurgence Strategy Program.

The CARS program was a P27-billion government initiative under the Aquino administration, which aimed to tap three car manufacturers to locally produce a total of 600,000 units of vehicles within a six-year period.

Only the country’s two market leaders enrolled in the program—Toyota, which committed to make Vios units here, and Mitsubishi Motors Philippines, which committed to make Mirage units.

“Because of the slowdown in sales, local manufacturing of vehicles, specifically the Vios and the Mirage, was also badly hit,” he said.

“The danger there is that there are commitments under the CARS program. Definitely, with all of this negative impact on the automotive industry, there is the risk the participants of the CARS program may not be able to achieve the volume they committed,” he added.

The Vios model cornered 38.6 percent of the market in the passenger car segment last year, according to a previous TMP statement. According to a report from Autoindustriya.com back in January this year, the company was still “on track to deliver its commitment under the program.”

However, the automotive industry was not spared from the sweeping changes brought about by the pandemic and the lockdown that was meant to contain it.

Member companies of Chamber of Automotive Manufacturers of the Philippines Inc. (Campi) and Truck Manufacturers Association reported a 48.7-percent drop in sales in the first seven months of the year, selling only 105,583 units as opposed to the 205,945 units sold in the comparative period in 2019.

Both Toyota and Mitsubishi are under Campi. Gutierrez, who is also Campi president, said the industry had been asking the government for help, although he deferred from expounding on the specific forms of assistance it was requesting.