Vehicle manufacturers upbeat on 2010 output

CAR ASSEMBLERS are looking at ending the year with higher output, a development which could even mean a factory expansion for some, industry officials yesterday said.

For others, it will just mean a slight improvement from years of under-used assembly lines — something the government hopes to remedy by encouraging exports.

The outlook was bared at the first day of the 3rd Philippine International Motor Show where companies behind 20 brands took turns to present their new models in a bid to rally sales.

So far, the industry has sold 37.2% more units or 98,119 in January to July compared to the same period last year, prompting the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) to hint at revising its conservative 11% growth forecast for 2010.

As such, at least three car assemblers are already looking at churning out more units this year, officials said at the sidelines of the event.

Toyota Motor Philippines Corp., for instance, expects to make 29,000 units this year — or 4,000 units more than registered capacity — at its Sta. Rosa, Laguna plant to meet market demand, its president, Michinobu Sugata, told BusinessWorld.

“We are working two shifts. We’re already over the capacity and expansion may come sooner,” Mr. Sugata said.

“We will decide by October this year. [If we do expand], it will be an initial 20% increase [in capacity].”

The entire vehicle manufacturing industry, meanwhile, could top last year’s output by nearly a tenth at least based on its output for the first four months, Philippine Automotive Competitiveness Council, Inc. Executive Director Benjamin C. Sevilla said in a telephone interview.

Already, the entire local industry has assembled 23,074 units in the first four months “and if this were annualized, it would seem like a 7.5% increase is likely”, Mr. Sevilla said.

He noted, however, that the increase would not be enough to top the 73,955-unit performance seen in 2002.

Officials of other car companies — Isuzu Philippines Corp. and Mitsubishi Motors Philippines Corp. — similarly cited higher production figures for the year. But expansion for them is not likely as their factories still have idle capacity, they said.

Isuzu Philippines, for instance, expects to assemble roughly 11,000 units this year which is more than 2009’s, the company’s head for government affairs Enrico Talag said without elaborating.

“But we’re only using half of the capacity now when back in 2002 or 2003, we were using 90%,” Mr. Talag said, noting that the record high had come when their Crosswind model along with other Asian utility vehicles enjoyed lower excise taxes.

Mitsubishi Motors Philippines, meanwhile, expects to increase production this year by a third to hit 16,000 units, claimed the president of the company’s rank and file union, Frank P. Mero.

This, however, is still lower than the record high back in 1996 when the company churned out 3,000 units a month or roughly 36,000 units for the year, Mr. Mero said.

“Industry capacity utilization is just 30-40%,” CAMPI President Elizabeth H. Lee told reporters at the event.

“[But] as global demand grows, there is an opportunity to exploit assembly plants here.”

The government, however, will have to improve the business environment to entice increased production, particularly by curbing the entry of lower-price smuggled vehicles, Ms. Lee said.

President Benigno C. Aquino III, who attended the event’s opening ceremonies, pledged to improve anti-smuggling efforts and also deliver on a promised incentive package that would encourage manufacturers to export output.

“[The new Motor Vehicle Development Program] could have export incentives. [Car firms] will need to generate more exports because that is what will give them more stability,” Trade Secretary Gregory L. Domingo added on the sidelines.

At present, only one car firm — Ford Group Philippines — is registered under the country’s Automotive Export Program and is even planning to stop producing and shipping out one of the three models it makes here.

The Board of Investments, which is in charge of drafting the implementing rules of the new Motor Vehicle Development Program, is trying to complete the document by end-August, managing head Cristino L. Panlilio said in a telephone interview yesterday.