MVPMAP

 

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)

 

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