After the CEO Meeting last August 28, 2006, a technical working group (TWG) to be headed by Dir. Ramon Rosales was created. This technical working group will be comprised mostly of the original PAID-WG members, the dim of the TWG is to conduct a thorough analysis on the feasibility of developing an affordable vehicle for the Filipino people.

A steering committee composed of CEOs of the Assemblers, Usec. Elmer C. Hernandez, Dir. Ramon Rosales and all Automotive Industry Association Presidents was also formed.

Apart from the TWG which will meet twice a week, four (4) assessment teams comprised of representatives from BOI, CAMPI, TMA and MVPMAP was also formed to meet at least once a week to conduct the study and submit data/results to TWG for analysis and preparation of recommendations to the steering committee.

more

Auto parts makers push benchmarking

Local automotive parts makers are asking for more government support such as incentives similar to those given by the respective governments of their ASEAN counterparts.

The parts makers said they are pinning their hopes on a Philippine Utility Vehicle (PhUV) program to increase sales volume through the localization of assemblers.

The Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP) said the industry supports some 28,000 workers.

"If the government hopes to come up with an auto industry development program that will finally work, it has to look at what our ASEAN neighbors have been doing," MVPMAP said in a statement.

The group said Thailand, which is the biggest auto assembler and market in ASEAN and is second largest pickup truck market after the United States, succeeded in being the truck capital of Asia through government support.

THe Thai government granted a wide array of incentives, including a government tax of only 3 percent. To reduce selling price and spur sales, it reduced excise tax.

MVPMAP added that more widespread credit availability also helped boost demand in Thailand.

Thailand also developed and extensive supporting network of auto parts manufacturers so parts will not have to be imported. With over 700 original equipment manufactures auto parts suppliers and 1,000 in supporting industries that together employ more than 217,000 workers.

The group said Thailand enjoys the reputation for having a strong supply base after its government attracted high-level parts suppliers by offering "priority activity" status to investments in identified key components.

This confers on the investor an eight-year tax holiday, duty-free machinery, visa and work permit support and land ownership rights. It then gave maximum incentives to activities, such as research and development, human resource development and design activities that support the auto sector.

To further cement its title as the "Detroit of Asia", Thailand Automotive Institute embarked on $218 million program to develop five key projects: HRD, auto experts dispatching program, establishment of R&D centers, auto parts testing centers and car-testing tracks, an information technology center and an auto export promotion center.

To broaden its auto industry base beyond the pickup market, Thailand will soon implement a "Best Little Car" project.

The group said Thailand has annual production volume in excess of 700,000 units and has hit the one million mark last year, with about 38 percent of these exported. It has decided early on to focus on the pickup truck as a niche market which now makes up 72 percent of total production.

Thailand serves as the regional production hub of several automotive companies. Even cheaper sports utility vehicles and its variants are available out of Thailand because of the use of a common pickup truck platform and power train.

MVPMAP said through its National Car Program, Malaysia has a vibrant auto industry that chums out 546,000 vehicles per year, making it the second biggest ASEAN car market. Proton and Perodua are Malaysia's national cars.

MVPMAP said its car parts suppliers all enjoy cuts in income and other taxes. As a result, jobs are generated and Malaysian cars were able to break into the international market.

Malaysia also supports its car parts makers by imposing higher taxes on importation of car parts and creating a mandatory standards for foreign products. It has even gone to the extent of challenging the World Trade Organization by imposing a series of non-tariff barriers on car imports.

The MVPMAP said although it did cut tariff for completely built-up (CBU) vehicles from 20 percent to 5 percent, it imposed that for an importer to avail of this, it has to be owned 70 percent by either the government of Bumiputera.

3,780 reasons to turn slumping auto parts industry around

By Tessa R. Salazar

The whir of auto machinery is increasing in Asia. South Korea, the fifth largest car manufacturing country in the world and the auto parts mecca in this side of the globe is slugging it out with automotive powerhouse Japan and emerging dragon China.

Thailand’s auto industry, meanwhile, is one of the country’s top performing sectors, as 1,800 auto parts maker/suppliers/service providers thrive. It is the main auto hub of South East Asia.

Not to be outdone is Malaysia, which has its own Proton (Iswara pegged at about $8,000 and above) and Perodua/Daihatsu (Kancil priced at $6,500 onward) to sell and its 590-strong auto component manufacturers. Both the manufacturers were granted the national car status and were given certain tax duty exemptions.

Healthy numbers

The rest of Asia shows healthy numbers in the car parts and auto sales sectors: Indonesia has 260 auto components makers.

On the other hand, the Philippines’ total auto parts and components maker, from 256 in 1996, has dwindled to 173 this year. What gives?

The Motor Vehicle Parts Manufacturers Association of the Philippines, one of two organizations of auto parts makers, analyzes the diminishing role of local auto parts makers. It explains that most parts for completely knocked down vehicles (CKDs) now comes with a package kit abroad, rendering local content from local parts manufacturers unnecessary.

MVPMAP adds that sales of completely built-up vehicles (CBUs) are on the rise.

60% local content

The increasing independence of CKDs from local parts manufacturers and the rising sales of CBUs are now forcing local auto parts manufacturers to venture into largely uncharted territory just to survive.

Though the details are still quite murky at this time, it’s quite clear that MVPMAP is working on locally built utility vehicle with 60 percent local content in cooperation with the Chamber of Automotive Manufacturers the Philippines, Inc. (CAMPI), Truck Manufacturers Association and the Board of Investments. This development was ascertained when the four groups recently created a working group called the Philippine Automotive Industry Development.

The working group has worked on a price sensitivity analysis and a Filipino market study and has come up with a plan to provide a new brand of utility vehicle priced at P350,000 or less. The design of the new vehicle has been said to closely resemble that of an Asian utility vehicle.

Ferdi Raquelsantos, MVPMAP spokesman and the working group’s chair, said the group plans to initially produce 30,000 units in 2007.

‘Gawad Kalinga’

Raquelsantos described the MVPMAP- initiated Philippine utility vehicles as the “Gawad Kalinga” of the auto industry, revealing that the group would target farm-to-market suppliers and cooperatives.

The local parts makers are set to lower the price by 30 percent for this particular project. Such drastic price reduction would entail redesigning the parts to make them affordable but still safe and roadworthy.

“A lot of simplification on the design should bring the cost down,” Raquelsantos added.

But will the unit sell? “Our study has revealed that the market for this particular vehicle is big enough,” he assured.

MVPMAP admitted, though, that it would be impossible to create a 100 percent local content vehicle in the near future. Thus, the group is negotiating with certain Japanese car manufacturers and Chinese auto parts makers to possibly supply essential body parts and the engines.

The entry of 350K “Philippine utility vehicle” is seen to have a positive effect on the local auto industry. “Instead of buying imported secondhand vehicles, the people now have the option to buy a brand-new utility vehicle at an affordable cost,” said Rommel Juan, MVPMAP chair of exhibits and missions.

QS9000 or TS16949 certified

In an attempt to dispel the image of locally made products as inferior, Raquelsantos stressed that most local parts makers are now QS9000 or TS16949 certified.

For several years, MVPMAP has been exporting wiring harnesses, filters, gear boxes (transmissions), radiators, tires, silencers, batteries, exhaust pipes, brakes, clutches and alloy wheels, to name a few. As of 2005, major export markets are Japan (32 percent), United States (23 percent) and Thailand (17 percent), Canada (4 percent), Indonesia (3.75 percent).

The local auto and parts industry had its heyday in 1996, when CKDs peaked at 141,000 units (87 percent of the total market) and CBUs numbered 21,000.

Last year, there have been only 57,000 CKD units (59 percent) and 39,500 CBUs for a total of 97,000 units – representing a sales level that has gone flat for eight straight years.

Silver lining

Local auto parts maker, at least those that are still around, see a silver lining among the clouds. They said there are 3,780 solutions – representing the number of car parts and components inside vehicle – to turn the slump around.

John T. Lee, MVPMAP director, said the reason why Korea reached its status was its nationalism and pride as a people. This included patronizing Korean-made products and being proud of it.

Perhaps local parts makers should also do a bit of tinkering with the Pinoy psyche while embarking in its ambitious people’s utility vehicle.

(Source: Manila Bulletin, 2 August 2006)

Auto parts makers push revival of People's Car Program

By Marianne V. Go

The Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP) is spearheading a revival of the glory days of the Philippine automotive industry through a new People's Car Program.

Under the scheme, the MVPMAP is proposing to introduce a brand new vehicle at the price of a second-hand car but with a high level of local content.

The MVPMAP board met recently with local car and truck assemblers, the Department of Trade and Industry, the Board of Investments, the Tariff Commission, the Export Processing Zone Authority, Sen. Richard Gordon, chairman of the Senate Committee on Transportation and his counterpart in the House, Rep. John Cua, to discuss the revival of the People's Car Program.

According to the MVPMAP, the Philippine automotive industry had its heydays in 1996 when 141,000 units of completely knocked down (CKD) vehicles (87 percent) and 21,000 units of completely built up (CBU) cars (13 percent) were produced.

It was also a boom year for local auto parts makers as well, as the production of 162,000 units was the highest ever.

Back then, there were very few CBU units the MVPMAP pointed out. CKD assembly use a lot of local parts compared to the CBU units which have no local component at all.

However, last year, the industry sold only 57,500 CKD units (59 percent) and 39,500 CBU units (41 percent) for a total of 97,000 units, the group lamented. Auto sales have been virtually flat over the last eight years.

More significantly, the sale of CBU vehicles last year was the highest on record, hurting the local parts makers in the process.

During the forum, MVPMAP chairman emeritus Feliciano Torres argued the trend of increasing CBU importation is not bad as long as it is not misconstrued as the real reason why CKD production is not increasing.

The sale of CBU units have grown from only 8,200 units in 1998 to 39,500 in 2005. It grew the most in 2004 when CBU sales have doubled from 15,000 in 2003 to 30,400 units.

The MVPMAP expected to benefit from what was originally planned by the government as an Automotive Industry Program to generate sales of 200,000 CKD units and 100,000 CBU units by 2007.

Unfortunately, a year away from the end of the target period, automotive industry sales stood at just a third of that level.

The Philippine vehicle industry, the MVPMAP observed, has been overtaken and left behind by its ASEAN neighbors.

The local parts makers are hence pushing for the revival of the People's Car Program, proposing a brand new vehicle at the price of a second-hand car but with a high level of local content like an updated version the affordable and highly-successful Asian utility vehicle (AUV).

From the car assemblers, the local parts makers are asking asking them to take the lead role in the design and development of the new People's Car, incorporating whatever parts the local parts makers can possibly supply that conforms to the assemblers' quality, cost and delivery requirements.

From the government, the MVPMAP is asking for support, protection and incentives, specifically putting a stop to the importation of used vehicles.

(Source: Philippine Star, 31 July 2006)

Vehicle parts makers urge revival of PCP

By Bernie Cahiles-Magkilat

Local parts makers have urged for the revival of People's Car Program to perk-up the lethargic domestic industry with the assembly of brand new but affordable vehicles using locally produced auto components as they worried on the impact of the increasing inflow of completely built-up brand new imported vehicles.

This was raised by the Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP) and the Philippine Automotive Federation, Inc. (PAFI) at the recent meeting with local car and truck assemblers, the Board of Investments, the Tariff Commission, the Philippine Economic Zone Authority, Sen. Richard Gordon, chair of the Senate Committee on Transportation and his counterpart in the House, Rep. John Cua.

During the meeting, the parts makers noted of the shrinking sales of completely knocked down (CKD) vehicles as against the percentage of completely built-up (CBU) imports.

CKD assembly requires the use of few locally produced automotive parts and therefore creates employment but a CBU operation is just merely marketing of the imported units with no local value added.

"The government must have a vision of where it wants the local vision of where it wants the local auto industry to be ten to twenty years from now. There has to be a joint development of lower entry vehicles from the assemblers' principals abroad. We need to focus on the development and production of vehicles affordable to Filipinos," said PAFI chairman Vicente Mills.

Thus, MVPMAP would like the proposed implementation of Version 2 of the People's Car Program to locally assemble new models using mostly locally produced auto parts.

The creation of the old People's Car category under the Car Development Program of the Motor Vehicle Development Program of the BOI was only meant to open the Japanese dominated car program to new participants with a minimum investment requirement and the introduction of imported but cheaper models first on a CBU packs and later for CKD assembly. It was the brainchild of then BOI managing head Tomas I. Alcantara under the Trade Secretary Jose Concepcion, Jr.

MVPMAP chairman emeritus Feliciano Torres said the proposed Version 2 of the People's Car would require existing local car assemblers to produce cars with high level of local content but with a price of a second-hand car.

This would help bring back the industry to its glorious days the Philippine automotive industry sold 141,000 with CKD units accounting for 87 percent share and 21,000 units CBU packs or a measly 13 percent share in 1996. Automotive sales reached its peak with 162,000 units in 1997.

Last year, the industry sold only a total of 97,000 units composed of 57,500 units CKD (59 percent) packs and the highest ever 39,500 units CBU (41 percent) packs.

The steady rise of CBU sales and the shrinking of the CKD sales in a vehicle market that is not growing is a cause for concern among local parts makers.

Torres noted that the trend of increasing CBU importation is not bad as long as it is not being misconstrued as the real reason why CKD production was not increasing.

The CBU units sold have grown from only 8,200 units in 1998 to 39,500 units in 2005. It grew the most in 2004 when CBU sales rose from 15,000 in 2003 to 30,400 units or by 103 percent. The local parts makers thus saw their market shrink very fast in an industry that hardly grew.

Parts makers expect to benefit from what was originally planned by the government as a 2004-2007 Automotive Industry Program envisioned to generate sales of 200,000 CKD units and 100,000 CBU units by 2007.

A year away from that target, the industry sales are but a third of that level. The Philippine vehicle industry has in fact been overtaken and left behind by its ASEAN neighbors.

Local pars makers are already asking the car assemblers to take the lead role in the design and development of the People's Car 2, incorporating whatever parts the local parts makers can possibly supply that conforms to the assemblers' Quality, Cost and Delivery requirements.

"This brings us back the images of the updated 21st century versions of the affordable and highly-successful Asian Utility Vehicles (AUV): Ford Fiera, Toyota Tamaraw, Isuzu KC20 and Nissan Bida," Torres said.

They are also batting for more support, protection and incentives specifically putting a stop to the importation of used vehicles.

During the meeting, Rep. Cua said that one of the Philippines' top export industry aside from electronics is automotive parts and components, thus the proposed People's Car Version 2 should be supported by the government.

He urged the parts makers to propose strategies for its development.

Sen. Gordon also encouraged the local industry to present to the government development programs and strategies, how to implement them and make them viable.

"If the industry expects to survive in a borderless trade environment, the local parts makers will have to close ranks and rebuild the industry," Gordon said.

(Source: Manila Bulletin, 31 July 2006)

Revival of people's car program sought

Brand new cars at second-hand prices

By Ronnel W. Domingo

A group of local auto parts makers called on the government and other members of the automotive sector to revive the people's car program amid a continued downturn in the parts sector.

Feliciano Torres, chair emeritus of the Motor Vehicle Parts Manufacturers Association of the Philippines, said in a statement the sector needed a boost considering that the assembly of completely-knocked down kits had been shrinking as importation of completely built units had been rising.

The assembly of CKD kits is the main driver of MVPMAP members' business, as this requires the use of local automotive parts.

Torres said that the automotive parts industry's performance peaked in 1996 when 141,000 CKDs were assembled and sold locally. This accounted for 87 percent of the total 162,000 vehicle units sold by the industry that year.

He said the following years saw a downtrend, with CKD units accounting for only 59 percent of the 97,000 vehicle units sold in 2005.

MVPMAP data show that CBU sales have grown from only 8,200 units in 1998 to 39,500 units in 2005.

At the same time, Torres said sales growth over the past eight years had been flat.

"What is hurting the local parts makers the most is the steady rise of CBU sales and the shrinking of the CKD sales in a vehicle market that is not growing," he said.

Torres clarified that an uptrend in CBU importation was not bad provided it did not cause the downtrend in the local assembly of CKDs.

"We were expecting to benefit from what was originally planned by the government under the 2004-2007 Automotive Industry Program which envisions sales of CKDs to hit 200,000 and CBUs to 100,000 units by 2007," he said.

"A year away, industry sales are still only about a third of that level," he added. "The Philippine vehicle industry has in fact been overtaken and left behind by its neighbors in Southeast Asia."

He said the answer could lie in the promotion of a second version of the people's car program, which would involve the development of a brand new vehicle at the price of a second-hand car but with a high level of local content.

"This brings to fore images of the updated 21st century versions of the affordable and highly-successful Asian Utility Vehicles (AUV) - the Ford Fiera, Toyota Tamaraw, Isuzu KC20 and Nissan Bida," he said.

Also, Torres said parts makers were calling on local car assemblers to take the lead in designing and developing the new people's car, "incorporating whatever parts the local manufacturers can possibly supply that conforms to the assemblers' quality, cost and delivery requirements."

As for government support, Torres said MVPMAP was seeking more assistance, protection from incentives. The industry, he said, specifically wanted the importation of used vehicles stopped.

(Source: Philippine Daily Inquirer, 31 July 2006)

Reviving 1996

Elsie Gaches
Community Service

Golf Tournament

more