CARS (Comprehensive Automotive Resurgence Program Participants) Program participants Mitsubishi Motors Philippines Corp. (MMPC) and Toyota Motor Philippines (TMP) are still behind in the production volume commitment of their enrolled models.
The Board of Investments (BOI), which administers the CARS Program, reported that as of December 2020, MMPC has produced a total of 143,000 units of Mirage and Mirage G4 while TMP has reached production volume of 128,000 units of Vios.
The program, which IRR was issued on November 16, 2015, requires participants to produce 200,000 units of their enrolled models within a six-year period.
BOI Executive Director Ma. Corazon Dichosa-Halili said the CARS participants’ production data was reckoned in 2017. This means MMPC had produced 35,750 units annually while TMP had rolled out 32,000 units a year, on the average over the past four years.
Understandably, there was a lag time in the participants’ start of production. Although the participants still have time to ramp up production, the pandemic is seen to continue to hamper their operations. Like other industries, the automotive sector suffered its worst in 2020.
BOI Managing Head Ceferino S. Rodolfo also noted that even as MMPC and TMP have already frontloaded their investments to produce their enrolled models, they have not yet claimed a single centavo of their tax incentives.
Under the program, participants can start availing of the tax incentives once they have exceeded the 100,000 production volume level.
MMPC invested P4.3 billion, including the P2-billion stamping shop facility located at the 21-hectare Greenfield Automotive Park in Sta. Rosa, Laguna that it acquired from Ford Motor Co. Philippines, which abandoned its car production operation in the country. MMPC opened the shop in 2018 for the production of its enrolled models Mirage and Mirage G4.
Meanwhile, TMP already poured in P5.38 billion for the CARS program at its factory in Sta. Rosa, Laguna. These investments include the local parts production of the Toyota Vios at the Resin Injection Molding Facility for bumpers and instrument panels, Roller-Hemming Robots at the welding line, and the newly-inaugurated A0 Press Line for stamping of side member panels.
Through these investments, TMP has started its journey towards “smart manufacturing,” integrating high-tech equipment in the Toyota Production System. Such facilities use robots to automate repetitive tasks, making production processes more efficient. To handle new production technologies, TMP also made substantial investments in manpower training for the acquisition of new skills.
Recognizing the difficulties in meeting the production commitment within the six year timeframe, the BOI has decided to extend the program by another three years for a total of 9 years. An executive order is yet being prepared for President Duterte’s signature. BOI expects Malacanang to issue the EO in May or June this year.
Another program support for local car manufacturing is the implementation of the safeguard measure against imported passenger cars by the Department of Trade and Industry (DTI). The provisional safeguard duty of P70,000 per unit of imported passenger cars took effect last February 1, 2021. The provisional safeguard duty is good for 120 days.
The Tariff Commission is expected to come up with a recommendation based on its determination if there is or no merit to elevate DTI’s provisional measure to a definitive safeguard measure, which could run for years.