Locally built cars losing ground to imported units

LOCALLY MADE vehicles have lost ground to imports eight months into the pilot year of a duty-free scheme, industry data compiled by BusinessWorld showed.

Philippine-built cars made up 50.7% of three major assemblers’ total sales from January to September, roughly one point down from the yearago figure.

With no new assembly incentives in sight, the downtrend has prodded some manufacturers to forecast higher concentrations of imports in their sales portfolios by yearend.

The government has promised new tax perks under an upgraded Motor Vehicle Development Program (MVDP) as the industry faced increased competition from imports. Tariffs on Southeast Asian cars were eliminated in January under a regional trade pact.

With the policy’s implementing rules still being drafted, however, import sales have grown at a brisker pace.

Mitsubishi Motors Philippines Corp. saw the share of locally made vehicles in their total sales slightly decline, as did Honda Cars Philippines, Inc., for the eight-month period.

Philippine-built cars comprised 42.5% of Mitsubishi’s sales, a share roughly one point lower than the 43.98% figure recorded in the same period last year.

“And it may be difficult to raise the sales ratio of our [locally made models] given our current lineup,” Froilan G. Dytianquin, Mitsubishi Motors Philippines vice-president for marketing, said in an e-mail.

Sports and Asian utility vehicles are currently driving total industry sales but Mitsubishi has only one locally assembled model taking advantage of the demand trend, Mr. Dytianquin said.

“Government support can come in through the new [MVDP] which will be able to develop more local parts makers, at the same time making [assembly] prices more competitive with incentives,” he said.

“If this happens, we can expect principals of auto assemblers… to consider us a production hub for future models which are strategic volume sellers for the domestic market and also as possible export to other Southeast Asian countries.”

Honda likewise saw its locally made models account for a smaller share as of September, at 71.1% now versus 72.3% a year ago.

The firm expects to end 2010 with a share roughly three points down from last year’s 74%, Honda Cars Philippines, Inc. sales head Voltaire T. Gonzales told BusinessWorld in a separate e-mail.

Industry topseller Toyota Motor Philippines Corp. fared slightly better, with the share of its locally made units staying 48%.

Toyota expects this ratio to hold by yearend and thus match the 2009 performance, corporate affairs vice-president Rommel R. Gutierrez said in an e-mail.

Sought for comment, the Philippine Automotive Competitiveness Council, Inc. (PACCI) — which groups assemblers and car part makers — echoed Mitsubishi’s call for government incentives to arrest the downtrend.

“The share of [locally made vehicles] to total sales remains sluggish because the industry needs to be strengthened to reach a robust stage of development…” PACCI Executive Director Benjamin C. Sevilla said in a separate e-mail.

Production-based incentives, support for local part makers, and full implementation of the import ban on second vehicles are needed to turn the situation around, Mr. Sevilla said.

Board of Investments managing head Cristino L. Panlilio said implementing rules for the new MVDP could be up for public hearing on Friday after which they can be finalized. –JESSICA ANNE D. HERMOSA, Senior Reporter, Businessworld