Nissan announces closure of PH plant

Nissan today announced it will stop production in the Philippines effective March 2021, putting an end to its lone completely knocked down assembly for passenger car model Almera to ensure efficient business operations in the ASEAN region

“Nissan in the Philippines, together with its vehicle assembly partner, Univation Motor Philippines, Inc. (UMPI), have made the decision to cease production operations for the Nissan Almera in the Santa Rosa plant in the Philippines, effective March 2021,” said the company statement.

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The decision has been made following the expiration of the assembly contract between Nissan Philippines, Inc. (NPI) and UMPI. An estimated 133 employees, who will be affected by the plant closure, will be provided their benefits and assistance during the transition period.

The decision is aligned with Nissan’s plan towards optimized production and efficient business operations in the ASEAN region, as part of the Nissan NEXT transformation plan.

“Nissan remains committed to its investments in the Philippines. The company will continue to contribute to the growth of the Philippine automotive industry through its innovative products and excellent services, as well as its dealer expansion nationwide,” said NPI.

According to the company, Nissan’s strategy in the Philippines is to keep the customer at the heart of our business, and focus on strengthening the fundamentals of Product, Service, Customer Experience, and People. Our customer-centric approach guides our product and service offerings, as well as network expansion.

Nonetheless, UMPI will remain active in the Philippines and continue its other business operations in the country. The well-being of employees is the highest priority. Nissan is coordinating with UMPI to ensure a smooth transition. The UMPI plant has total capacity of 18,000 units annually.

NPI spokesperson Dax Avenido said Almera has been produced in the Philippines since 2013. Last year, it sold 3,238 units from 4,866 units the previous year. NPI said it is still has enough inventory units to serve orders.

NPI offers 9 imported completely built up models in the Philippines, with Almera as its lone CKD model.

Trade and Industry Secretary, who was informed of the decision a day before the announcement, emphasized the need for auto safeguard measures amid the closure of the Nissan assembly plant.

“The announcement of Nissan to close their assembly operations in the country is

regrettable, as these developments all the more demonstrate the critical situation of the

local motor vehicle industry. Thus, the provisional safeguard measures need to be

immediately put in place to protect the domestic industry from further serious injury,” Lopez said.

Lopez also cited reports that prior to the Philippine plant closure, Nissan since 2019, Nissan had already closed plants across Europe, US and developing countries and have laid-off  approximately 42,500  workers globally. Moving forward, it plans to further cut its global production capacity by 20% as well as its number of models offered to the market.

In the Philippines, Nissan Almera’s sales of around 4,500 represents just 1 percent of the total vehicle market and its assembly activity employs 133 workers. Introduced in the country in 2011, the current 3rd generation Almera had likewise over-extended its model life cycle.

According to Lopez, NPI already contemplated on closing last year given weaker volume sales and low market share of the Almera. They have in effect extended their stay.

Their major sales come from imported pick-ups and sport utility vehicles (SUVs).

Nissan, however, reassured DTI that the 133 workers will be provided reasonable compensation packages and that only assembly workers are affected, as operations of their marketing and distribution network will continue – selling units imported mainly from Thailand and Japan.

Moreover, the Department of Labor and Employment (DOLE) and the DTI regional offices will collaborate in providing affected workers with manufacturing jobs.

Sec. Lopez also stated that “The stoppage of Almera’s assembly operations, following closely that of Honda and Isuzu, only highlights that the local auto assembly industry is critically impacted by the surge in imports and will thus benefit from the time-bound safeguard duty.”

“Alongside the modernized incentives being made available under the CREATE Bill, the DTI is undertaking a comprehensive approach to revive the auto industry - employing coherent policy measures while still maintaining fair trade and the contestability of the market for imports. This, together with the major reforms we are doing—such as the Public Service Act, the Rice Tariffication Law and the Build, Build, Build program, and many more—will bring about a more attractive investment climate moving forward,” the trade chief added.

He stressed that the Philippine auto market is one of the most open among the larger ASEAN member countries. For instance, Thailand imposes an 80% Most Favored Nation (MFN) tariff rate on completely built-up units (CBU) originating outside ASEAN.

Meanwhile, with various non-tariff measures on motor vehicles in place, Indonesia has effectively discouraged imports and, as a result, imports account for only 7% of

Indonesia's domestic market. This is in stark contrast to the Philippines, where locally assembled light commercial vehicles account for only 7% of the market.

Nissan is currently leasing the manufacturing facility owned by the Taiwanese company, Yulon Group. Accordingly, the plant itself will be kept, similar to how the Honda’s facility, remained intact.

The Secretary expressed hope that the plant can be used for the next entrant to local assembly of cars when the business climate improves after the pandemic.