The government has finalized a funding mechanism for its flagship automotive manufacturing incentive program, moving to reassure investors after a presidential veto of the 2026 budget allocation sparked concerns over the state’s fiscal commitments.

Finance Secretary Frederick D. Go told reporters on Friday, Jan. 16, that the Marcos administration has secured a solution to finance the Comprehensive Automotive Resurgence Strategy (CARS) program.

“After much chatter on the vetoed funding of the CARS program, the government has finalized a funding solution for the CARS program,” Go told reporters.
“Therefore, car manufacturers enrolled in the program can now be assured that the government will fulfill its commitment to investors,” he added.

The government’s move aims to stabilize the investment climate for major car manufacturers who have integrated the local production incentives into their long-term regional strategies.

The funding for the CARS program is now settled following discussions regarding the vetoed portions of the budget, Go said.

He noted that the government is committed to fulfilling its obligations to enrolled manufacturers, noting that the private sector has expressed support for the renewed financing pledge.

The program, first launched in 2015, was designed to transform the Philippines into a regional automotive manufacturing hub by offering performance-based fiscal incentives to companies that meet specific production targets.

While the CARS program will receive definitive funding in 2026, Go declined to provide specific figures on the revised allocation, deferring to Budget Secretary Rolando Toledo for the technical details of the financing structure.

The clarity comes after the executive branch vetoed an initial ₱4.32 billion allocation for the program within the proposed ₱6.79 trillion national budget for 2026.

A separate initiative, the Revitalizing the Automotive Industry for Competitiveness Enhancement, or RACE, program, was also slated to receive ₱250 million through unprogrammed funds this year.

Go clarified that while the RACE program remains part of the broader industrial strategy, current administrative focus has centered on resolving the CARS impasse.

Toledo earlier this week assured program beneficiaries that the government remains prepared to settle unpaid tax incentives.

The CARS program requires participants to manufacture at least 200,000 units of an approved model over a fixed period to qualify for the subsidies.

By reaffirming the 2026 funding, the Marcos administration seeks to maintain industrial momentum and prevent a disruption in the supply chains of the nation’s burgeoning automotive sector.