By Bernie Cahiles-Magkilat
Toyota Motor Philippines (TMP) yesterday unveiled the Philippine-made all new Vios even as the company expressed difficulty in achieving the 200,000-unit production volume commitment under the Comprehensive Automotive Resurgence Strategy (CARS) given the current weak domestic market.
TMP President Satoru Suzuki cited this big challenge in a speech during the ceremonial roll-off at the company’s manufacturing plant in Sta. Rosa, Laguna.
“It took us ten years to achieve that cumulative 200,000 production level with the previous variants so this is indeed a very big challenge,” Suzuki said. As of end 2017 or for a period of 14 years, TMP was able to sell 254,380 units of the old Vios, making it the best-selling model in its category and capturing 24 percent share of the overall passenger car market.
According to Suzuki, they would like to achieve around 3,500 unit sales a month starting next year but the current situation has not been favorable. They are selling below 3,000 units a month starting due as the domestic market slowed down. TMP sales declined 14.7 percent to 73,136 units in the first semester this year from 85,728 units in the same first half last year.
Overall, the domestic motor vehicle industry capped the first semester with a continuing negative 12.5 percent although the industry, which registered total sales of 450,000 units last year, has remained confident to achieve a flat growth for the entire year. Sales of the dominant 22-member Chamber of Automotive Manufacturers of the Philippines Inc. sold only 171,362 units in the first semester this year versus 195,772 units in the first half of 2017.
“This may affect our achievement of this Vios requirement, but of course we will try to achieve and retail more than 3,000 units a month,” he said hoping that the market will recover after this current slowdown to help them achieve the goal set under the CARS program.
Already, TMP’s production this year may be limited to 53,000 units this year only but the country’s largest car assembler expects to achieve more than 100 percent of its 55,000 unit capacity utilization by next year should the market recovers.
The CARS program grants $200 million worth of tax and fiscal incentives to each of the two program participants, which are required to produce 200,000 units for their enrolled model over a six-year period.
To produce the new Vios, TMP has invested P5.53 billion, including close to P3 billion in in-house investments for big body parts like bumper and body shell; P620 million for vehicle production; local suppliers contributed P977 million in investments for the production of local parts; and P958 million for other investments for tooling equipment.
The investment has resulted in the localization of 352 individual Vios parts or more than 40 percent local content for the new Vios, which is 22 percent higher than the local content of the old model. The new Vios also boasts of amenities that are only present in top of the line models.
In his speech at the ceremonial roll-off, Trade and Industry Secretary Ramon M. Lopez even urged TMP to exceed the 50 percent minimum local content requirement under the CARS Program.
“The CARS Program is at the heart of our Manufacturing Resurgence Program. With MRP, we will rebuild existing capacity of our local industries, strengthen new ones, and maintain their competitiveness. More importantly, this program — among the many initiatives under the Duterte administration — will help us create more jobs and income opportunities for our people as mandated by the President,” said Lopez.
With the support of the 2017 Investment Priorities Plan (IPP), he said, the MRP will close the gaps in industry supply chains, provide access to raw materials, and expand domestic markets and exports for locally manufactured products.