Automotive industry in the Philippines

The automotive industry in the Philippines is the 9th largest in the Asia-Pacific region, with approximately 273.4 thousand vehicles sold in 2019.[1] Most of the vehicles sold and built in the Philippines are from foreign brands, for the most part, the Philippines is dominated by Japanese automobile manufacturers like most of its ASEAN neighbors.[2] The automobile production in the country is covered under the Philippine Motor Vehicle Development Program being implemented by the Board of Investments.[3] In addition, there are also a small number of independent firms who assemble and fabricate jeepneys and other similar vehicles, using surplus engines and drivetrain parts mostly from Japan.

Traffic in Epifanio de los Santos Avenue (circa 2009)

The Philippine automobile industry consists of two sectors: motor vehicle assembly and vehicle parts and components manufacturing. The country also has an active premium car market and commercial vehicle segment.

Automobile sales in the Philippines mostly consist of locally assembled and imported cars, notably coming from Thailand, Indonesia, and from other countries. In 2019, the average cost difference of an imported vehicle coming from Indonesia was 24 percent lower than a locally produced car. The same cost difference applied to completely built-up cars from South Korea (also 24 percent) and Thailand, with 18 percent.[4] The country also imports cars coming from the United States.

History

The Philippines' automobile industry started during the American colonial period from 1898 to 1946. Filipinos were used to riding animal-pulled vehicles, and wealthy citizens were initially the ones who could afford to buy and own these newly introduced automobiles. Back in those days, on average, it took at least three months to ship an automobile from Europe or the USA, to Manila.

Cars and motorcycles were introduced and made available in the country by trading companies as early as 1901, with Dr. Juan Miciano, being acknowledged as the first Filipino to buy and operate a motor vehicle. He drove a French-made Richard-Brasier in which he bought back in 1901, according to a 1910 motor car directory.[5] Although prior to that, back in December 1900, the US Army Signal Corps had brought in a number of electric cars by Woods Motor Vehicle Company into the country for military use only. It marked the early appearance of motor cars in the country.[6]

In the early days of the Filipino automobile market, American-made cars from Mercury, Buick, Chevrolet, Ford, and Dodge have dominated the car market from the 1920s all the way to the early 1970s. And the country pioneered the establishment of automotive assembly in Southeast Asian region. An import substitution policy was developed for the 1950s, which led to the prohibition of and then punishingly high tariffs on the import of fully built-up cars from 1951 until 1972.[7]

American and European-made cars were a common sight on the country’s road by the 1960s. In that same decade, Japanese-made cars were introduced in the market. The country's auto industry was on the number one spot in entirety of Southeast Asia during that period. By the mid-1960s, fuel economy and practicality began to become important criteria for a growing number of car buyers in the country. The Japanese car manufacturers were at the forefront of cars that feature fuel economy and practicality. And at this point, American car manufacturers like General Motors turned to their European and Australian subsidiaries Vauxhall and Holden, to bring in the mid-size and compact cars to compete against Japanese marques in the growing car market.[8]

In the 1970s, local production of automobiles in the Philippines began in 1975 with mostly passenger and some commercial vehicles. During the 1973 oil crisis, Marcos advised Filipinos to buy smaller, more efficient vehicles with four-cylinder engines. In which demand for full-size American sedans fell in favor of economical, reliable, affordable, small and practical cars like the Toyota Corolla, Volkswagen Beetle, Ford Cortina, Mitsubishi Colt Galant, Isuzu Gemini, and more to name a few. By the mid-70s, popularity of full-sized American cars had quickly dwindled and the compact, subcompact, and some mid-sized cars have quickly become popular ever since then.

In 1973, the government instituted the Progressive Car Manufacturing Program (PCMP), a system with scheduled increases in local parts content requirement which also allowed program participants to import a certain proportion of completely built-up vehicles.[7] The original participants were General Motors, Ford, PAMCOR (a Chrysler/Mitsubishi joint venture), Delta Motors Corporation (Toyota), and Nissan Motors Philippines. A local Volkswagen assembler, DMG, attempted to build a native national car, the "Volkswagen Sakbayan" (short for sasakyang-katutubong-bayan) but this did not last long. It was based on the Volkswagen Country Buggy.[7]

During the 1980s, the mid-size, compact and subcompact Japanese and some European cars became dominated the Philippine market. However, by 1985, several car manufacturers closed and left the Philippine market, leaving Nissan and Mitsubishi in the market. By 1985, due to economic hardships, cars like the Nissan Stanza and Mitsubishi Lancer were the only choice left for car buyers back while the rest still drove mid to the late 1970s to the early 1980s cars. And the Philippines automobile industry fell drastically, what once known as leading automotive industry in the 1960s in Southeast Asia failed due to economic downturn in the 1980s. And Thailand has now been known as the “Detroit of Southeast Asia” since their industry ranks 12th in the whole world and currently the largest in Southeast Asia. Towards the end of the 80s, some car manufacturers including Mitsubishi, Nissan and Toyota, resuming business operations in the Philippines in 1988. With the recovery of the country’s economy from the 1980s until in the mid-1990s, the automotive industry in the Philippines recovered with local vehicle manufacturers hitting 138,000 units in 1996. This figure is 85 percent of the domestic vehicle sales of the period.[9]

The original PCMP (Toyota, Mitsubishi, Nissan) members returned in 1988 after the People Power Revolution ousted Marcos in 1986, and eventually, no less than thirteen manufacturers vied for a market limited to around 100,000 cars per year.[7] During the 1997 Asian financial crisis, several makers withdrew as sales declined, becoming de facto CBU importers rather than assemblers. Since 1998 the Philippine automotive manufacturing policy has been in flux, severely undermined by the preponderance of lightly used cars from Japan and South Korea.[7] A new program was introduced in 2002, EO 156, actually undermined any local assembly by lowering the sales tax on the cheapest microcars, called "Bantam cars" in the Philippines, which are almost entirely imported from other ASEAN countries or China. Meanwhile, the popular locally assembled AUVs with high Philippine parts content were hit with considerable sales tax increases due to their bigger engines and higher up front prices.[7]

The total industry sales plummeted anew to five digits annually from 1998 to 2006. It was only in 2007 onwards the automobile industry sales begin to climb to pre-crisis levels, where the total industry sales reached 144,435 units.[9] Production of completely knocked down cars remained stagnant after the 1997–1998 economic crisis, and since 2008, CBU imports outnumbered the locally assembled cars.[9]

The 2010s was seen as great decade for the automobile industry in the country, with new car brands and vehicle models arriving for the local market. Since 2015 onwards, the country’s automobile market has been progressing.

The automobile industry in the Philippines is struggling due to the COVID-19 pandemic. Even before the pandemic, sales were greatly affected due to the 2020 Taal Volcano eruption. Although sales are recovering but the local automobile industry’s monthly average sales performance are still way below the figures.

Government programs

Progressive Car Manufacturing Program (PCMP)

In 1973, President Ferdinand Marcos signed the Progressive Car Manufacturing Program (PCMP). Originally there are 4 car manufacturers chosen to be part of the program, but Ford Motor Company was determined not to be left out. Ford made a proposal to the government that, if included, Ford would provide a stamping plant. After an 11-hour proposal, the deal was settled and PCMP ended being a five-participant venture.[10] The program consisted of Delta Motors Corporation/Toyota, Nissan Motors Philippines, Ford Philippines, DMG/Volkswagen and PAMCOR, a joint venture of Mitsubishi and Chrysler.

The first Asian Utility Vehicles (AUV, local versions of the Basic Utility Vehicle project then in vogue) Was made with full manufacturing and assembly capabilities, each of the five PCMP participants were spurred to produce vehicles completely from local materials, designed for local needs. In terms of design, all AUV's body parts were flat stamped (no compound curves) requiring minimum investment in tooling and simplifying repairs. The most successful of the AUV's in the country were the Toyota Tamaraw and Ford Fiera. From the chassis cab, Ford and Toyota designed numerous body styles for specific uses for small business' such as farmers and fishermen. Affordability was a target for all AUV's. To solve this, Ford prepared project studies for varied uses. They had a financial arrangement with Citibank to give additional consideration if the applicant would follow the project study.[7]

Other remaining 3 car manufacturers that is also part of PCMP Program made their own AUV to compete with the local market, it included the Mitsubishi Cimmaron (spiritual predecessor of the Mitsubishi L300), DMG/Volkswagen Sakbayan, GM Harabas, Isuzu KC20 and Nissan Bida. (Initially, it was going to be a 4th generation Ford Fiera, but as a result Ford leaving the market in 1984, Nissan bought the rights to the Fiera and sold it as a Nissan). Delta/Toyota also developed a local SUV mainly for military use, the Delta Mini Cruiser. After the early 1980s financial collapse, 2 out of 5 of the PCMP members withdrew, leaving only Nissan and Mitsubishi. The program was considered to be a failure, as stated by then Prime Minister of the Philippines, Cesar Virata. He also admitted that since 1975, not one of the five participants in the PCMP had produced a car that could be considered “Made in the Philippines.”[10] vehicles such as the Ford Fiera, was being assembled at Ford Lio Ho Motor in Taiwan. And the Toyota Tamaraw was known of its Indonesian origin.

Car Development Program (CDP)

In 1987, PCMP was replaced by the new "Car Development Program" (CDP), with lower local parts requirements. The original participants of the program were Mitsubishi, Nissan and Toyota, when they went back into business in 1988.[9] This program made car manufacturers to build up local assembly plants. In 1990, addition of the People’s Car Program to the CDP paved the way for the entry of new car manufacturers such as Honda, Kia, and Fiat.[9] Honda, Kia Motors, Fiat, and later Proton built assembly plants in the country. With Honda assembling the Honda Accord, Honda Civic, Honda CR-V and Fiat assembling the Fiat Uno, Kia and Proton assembling/selling the Kia Pride and Proton Wira for the local market. A Luxury Car Program was also added in 1992 as part of the CDP amendment. It saw the entry of Volvo, BMW and the re-introduction of Mercedes-Benz. Volvo 850s and the BMW 3 Series (E36) were also being assembled in the country as semi-knocked kits.[11]

Public Utility Vehicle Modernization Program (PUVMP)
Main article: Public Utility Vehicle Modernization Program

The Public Utility Vehicle Modernization Program was launched by the Department of Transportation of the Philippines in 2017, with the goal of making the country's public transportation system efficient and environmentally friendly by 2020. The program calls for the phasing-out jeepneys, buses and other Public Utility Vehicles (PUVs) that are at least 15 years old and replacing them with safer, more comfortable and more environmentally-friendly alternatives over the next three years. Manufacturers like Hyundai, Isuzu, Hino, Mitsubishi Fuso, and even Russian brand GAZ have participated to build modern PUVs based on their existing van, truck and bus lineups to replace the ageing Jeepney.

Comprehensive Automotive Resurgence Strategy (CARS) Program

The CARS Program was implemented by the Department of Trade and Industry in order to attract and encourage new car companies to produce vehicles in the Philippines[12] and stimulate demand and impose industry regulations that will restore the country’s automotive industry, and make the country a regional automotive manufacturing hub,[13] and creating more jobs in the country. The program is doomed to fail, since most car manufacturers see the Philippines as an importer of vehicles rather than an exporter. Most car manufacturers would build assembly plants in Thailand, Indonesia, Malaysia, Vietnam and even China due to their corporate taxes, operations setup and costs, are lower.[12] And there are more major parts supplier that have set up shops in these countries, meaning importing parts are not needed.[12] Other factors include minimum wages and electricity costs, which are also slightly lower compared to the Philippines.

Price difference on imported cars coming from Indonesia or Thailand have been reportedly to be much lower compared to a locally assembled car. This is because the country does not impose tax incentives on imported cars. Unlike Thailand, it has preserved its automobile industry by giving an advantage with tax incentives on the locally-made vehicles.[12] Meaning 4 out of every 5 cars sold are complete built-up (CBU) imports. Only about 1% of vehicles are locally assembled.[12] This resulted in closing of assembly plants of Ford in 2012 and Honda in 2020. While Isuzu decided to stop local production of the Isuzu D-Max in 2019. This meant cars from their lineup will be either imported from Thailand or the USA. So far, only two Japanese car manufacturers, Mitsubishi and Toyota, have taken part on the program. The program initially has the capacity for three car manufacturers, but no other automaker has participated to take up the third position.[14] Mitsubishi was approved by the government under the CARS Program in 2016[15] and announced the local production of Mitsubishi Mirage and the Mirage G4 in 2017.[16] Toyota Motor Philippines has been manufacturing the Toyota Vios since 2013, and enrolled the Yaris ATIV-based Vios to be locally manufactured. Both manufacturers have a target to produce 200,000 vehicles within 6 years.

Active manufacturers

Notable Filipino automotive manufacturers include Sarao Motors and Francisco Motors Corporation.[17]

As of February 2021, there are 58 official car brands in the country.

Toyota
Main article: Toyota Motor Philippines
A Toyota dealership in the Philippines

Established on August 3, 1988, Toyota Motor Philippines is a subsidiary of Toyota Motor Corporation, based in Santa Rosa, Laguna, Philippines. They responsible for the assembly and distribution of Toyota vehicles in the Philippines since 1988. And since 2009, TMPC is also provider to Lexus Manila, Inc., the official distributors of Lexus cars in the country. TMPC is the largest automotive company in the country, with the widest vehicle line-up of 21 models and a sales distribution and service network composed of 63 dealerships nationwide. Prior to that, Toyota vehicles were being sold in the country since 1962 by Delta Motors Corporation. They were responsible for assembling and distributing Toyota vehicles for the Philippine market. Delta Motor Corporation collapsed during the Philippine economic downturn in the early 1980's. Toyota was not present in the market for four years.

Nissan
Main article: Nissan Motor Philippines

Nissan started in 1969 with the appointment of Universal Motors Corporation (UMC) as the authorized assembler and distributor of Datsun cars and pickups in the country. In 1983, Nissan Motor Company established Pilipinas Nissan, Inc. (PNI) to assemble and distribute Nissan passenger cars. The company was renamed Nissan Motor Philippines, Inc. (NMPI) in 1991. In September 2000, the Yulon Motor Co. took control of NMPI from Nissan Motor Company. Since 2013, the company has now been known as Nissan Motor Philippines (NPI).

In 2021, Nissan Philippines announced that it will be shutting down its Santa Rosa plant by March. Ending the Nissan Almera assembly operations.[18]

Honda

Honda Cars Philippines Inc. (HCPI) was established in October of 1990. Under the Philippine government’s Car Development Program, production operations commenced on February 1992. To date, HCPI is a team of over 600 associates, working with 38 dealers nationwide and about 60 parts and materials suppliers. Their assembly plant is located in Santa Rosa, Laguna. But in March of 2020, HCPI announced that it would cease production operations at its plant in Santa Rosa. Marking an end to 27 years production.[19] Since then, most cars will be imported into the Philippines from nearby Southeast Asian countries like Thailand and Indonesia.

Mitsubishi
Main article: Mitsubishi Motors Philippines Corporation

Originally established as Chrysler Philippines Corporation in 1963 as the assembler and distributor of Chrysler, Dodge and Plymouth cars in the Philippines. The company was incorporated in 1987 as Philippine Automotive Manufacturing Corporation (PAMCOR). And since 1996, the company was renamed as Mitsubishi Motors Philippines Corporation (MMPC). Its former assembly plant is located in Cainta Rizal, operating from 1963 to 2014. Since 2015, its current location is in Santa Rosa, Laguna.

MMPC's former plant in Cainta, Rizal

Hyundai
Main article: Hyundai Motor Company

Hyundai Asia Resources, Inc. (HARI), is currently the official distributor of Hyundai passenger cars and commercial vehicles in the Philippines, they were appointed by Hyundai Motor Company of South Korea in August 2001 as the official distributor of Hyundai vehicles in the Philippines. It has earned its spot as the third top player in the Philippine automotive industry. There are currently 42 dealerships around the country. Their plant in Santa Rosa, Laguna currently produces the Hyundai Accent, Hyundai H100, and the Hyundai H350. Hyundai first entered in the Philippine market selling the Hyundai Excel and the Hyundai Grace van in the early 1990’s. Later introducing the Hyundai Starex and the second generation Hyundai Elantra towards the end of the decade.

Recently, the company expects further sales to be boosted by its Hyundai Modern Jeepneys with the implementation of the Public Utility Vehicle Modernization Program. HARI targets to sell more modern jeepneys as the government pushes for the Public Utility Vehicle Modernization Program to replace the ageing Jeepneys.

Ford
Main article: Ford Motor Company Philippines

Ford’s history in the Philippines can be traced back in 1929. Ford Philippines, Inc. (FPI) was established as a subsidiary of the Ford Motor Company in 1967 and began production operations on May 3, 1968. Ford left the market in 1984 due to the local economic recession. The brand came back in 1997 as Ford Motor Company Philippines, Inc. (FMCPI). Ford built a manufacturing plant that opened in September of 1999. During its lifetime, the plant has provided Ford and Mazda products like the Ford Lynx, Ford Escape/Mazda Tribute, Ford Focus, Mazda3, and the Mazda-based Ford Ranger not only for the local market but also neighboring countries such as Indonesia, Vietnam, Thailand, Malaysia, and Singapore.[20] The plant closed down in 2012. Since then, Ford Philippines imports the vehicles it sells mostly coming from Thailand and the United States to the Philippine market. Ford Philippines also used to sell Lincoln cars in the country.

Their former plant in Santa Rosa, Laguna is now owned by Mitsubishi Motors Philippines.

General Motors
Main article: General Motors

Chevrolet’s operation in the country is under the control of The Covenant Car Company Inc. GM engaged a partnership with The Covenant Car Company, Inc. (TCCCI), appointed by GM Southeast Asia as an independent and exclusive importer and distributor of Chevrolet automobiles and parts in the country. TCCCI was officially incorporated on July 1, 2009 and assumed business operations on October 1, 2009.

With partenership of GM, they launched GM Philippines, Inc. in December 1st, 2014.[21] Most of the cars in Chevrolet’s lineup were imported from Thailand, USA, and South Korea.

Prior to that, Yutivo Corporation was responsible of production and manufacturing of General Motors products in the country. Originally founded in 1887, Yutivo has been in charge of assembling Chevrolet, Opel, Holden, Vauxhall, Buick, and even Isuzu cars and truck in the country.[20] They became a spare parts distributor for General Motors in the country back in 1940. Yutivo then started assembly operations in 1953 and went on business until 1976.[22]

Mercedes-Benz

Mercedes-Benz was established in the 1990's under the Luxury Car Program. But prior to that, the brand has been in the country since the 1950’s, assembling the Ponton, Mercedes-Benz W110, Mercedes-Benz W114/W115 and the Mercedes-Benz W123.[11] Currently, Auto Nation Group, Inc. (formerly known as CATS Motors, Inc.) is the general importer and distributor of Mercedes-Benz vehicles, parts and accessories in the Philippines. It’s history traces back in 1989 when it’s founder Felix R. Ang opened CATS, a car accessories and tires sales and servicing business. In 1991, Mercedes-Benz appointed CATS Motors as an authorized workshop in the Philippines, and eventually as a dealer in 1993. Auto Nation Group (ANG) is also responsible of selling Chrysler, Dodge, Jeep, and RAM vehicles in the country.

Volkswagen

Domingo M. Guevarra Sr and his company, DMG Inc., was responsible for importing, production and assembly of Volkswagens in the Philippines. The Volkswagen Kombi and the Volkswagen Beetle were some of the first models built by DMG. They later built Volkswagen Brasilias, and Volkswagen Passats were also reportedly being made in the country as well.[11] DMG was known for its DMG-Volkswagen Sakbayan, in an attempt to build a national car, being based on the Volkswagen Country Buggy. DMG went bankrupt in the mid-80’s. And Volkswagen later came back in 1990’s, selling the Volkswagen Polo Classic from 1996 until 1999. Cars like the Volkswagen Caravelle (T4) and the Volkswagen New Beetle was not officially sold by Volkswagen themselves but instead imported new via grey market and sold by retailers towards the end of the 90’s and start of the 2000’s. In 2013, Volkswagen returned to the Philippine market with the partnership of Ayala Corporation.

BMW
See also: BMW

Between 1994 and 1997, the BMW 3 Series (E36) was being assembled locally by SKD kits.

BMW Philippines is currently an owned subsidiary of San Miguel Corporation, and the official importer and distributor of BMW vehicles in the country.

Vehicles currently manufactured in the Philippines

Toyota: Vios, Innova

Mitsubishi: L300, Mirage, Mirage G4
Fuso: Fuso Canter, Fuso FK/FL/FM, Fuso FI, Fuso FJ, Rosa, Fuso FP/FV

Hyundai: Accent, H100, H350

Kia: K2500

Foton: Toplander, Thunder, View Transvan, View Traveller, Toano, Gratour MT, Gratour TM, Tornado

Isuzu Trucks: Q-Series, N-Series, Forward, C/E-Series
Isuzu Buses: PABFVR34P, PABFTR33P, LV123, LV423, Mini Bus, NQR

Hino Trucks: 300 Series, 500 Series, 700 Series
Hino Buses: RC421(ER200), RF821(EK100), RM2KSS (K13D), RK3HS (H07D), RK1JMT (J08C-TK), RK1JST (J08C-TK), RM2PSS (P11C-TH), RU2PSS (P11C-TE), RK8JMUA (J08E-UB), RK8JSUA (J08E-UB), RN8J (J08E-UB), FB2W, FB4J, FC3J, FC9JL7A (J05E-TY), FF3H (H06D)AK174, (EH700)AK176 (EH700), FG8JPSB (J08E-UG), FG1JPUB (J08C-F), FG1JPUZ (J08C-TT), FG8JPUB (J08E-UG), FG8JP7A (J08E-WF), HT223A (M10U), HT225A (M10U), SH2P, SH1E, SS2P, SS1E

Daewoo Bus: BV115, BF106, BS106, BH117H, BS120S

See also


References
  1. cycles, This text provides general information Statista assumes no liability for the information given being complete or correct Due to varying update; Text, Statistics Can Display More up-to-Date Data Than Referenced in the. "Topic: Automotive industry in the Philippines". Statista.
  2. https://boi.gov.ph/wp-content/uploads/2018/02/Automotive-July-3-2017.pdf
  3. "Automotive".
  4. "Philippines: cost difference of CBU vehicles compared to locally produced cars, by source country". Statista.
  5. https://www.topgear.com.ph/features/feature-articles/Philippine-cars-cost-history-a52-20180524?_ga=2.137065907.2077711009.1598634838-1339876203.1598634836
  6. "What were the first car dealerships in the Philippines?". https://www.topgear.com.ph. External link in |website= (help)
  7. https://www.eria.org/ERIA-DP-2015-09.pdf
  8. https://oldmanila.org/2018/03/05/cars-of-old-manila/
  9. "Looking back: 32 years of the auto industry". motioncars.inquirer.net.
  10. "Once there was a PCMP".
  11. "Made in the Philippines: Cars that proudly flew the flag - Feature Stories". AutoIndustriya.com. June 12, 2018.
  12. "Auto manufacturing in the Philippines is an endangered species - Editor's Note". AutoIndustriya.com. February 27, 2020.
  13. "Comprehensive Automotive Resurgence Strategy (CARS) Program - Securing The Future of Philippine Industries".
  14. Gamboa, Rey. "Cars program headed for epic fail?". Philstar.com.
  15. 31. https://mmpc.ph/pressrelease/mitsubishi-motors-philippines-approved-cars-program-participant/
  16. "These companies will help Mitsubishi PH build the Mirage locally". https://www.topgear.com.ph. External link in |website= (help)
  17. "Revered Popemobile to make the rounds of PHL churches". GMA News Online.
  18. https://business.inquirer.net/316212/nissan-to-shut-down-laguna-plant
  19. "DOLE, DTI to convince Honda Cars Philippines to continue production in Laguna". GMA News Online.
  20. "Ford Philippines | The Ford Philippines Assembly Plant". web.archive.org. April 11, 2013.
  21. "Philippines – GM Careers".
  22. "Yutivo Corporation Web Site". www.yutivo.com.
This article is issued from Wikipedia. The text is licensed under Creative Commons - Attribution - Sharealike. Additional terms may apply for the media files.