IMA March-April 2015 Automotive

Injection Moulding Asia Automotive

Philippines to take its cue from Asian neighbours The Philippines intends to become an automotive

A combined report issued by the Chamber of Automotive Manufacturers of the Philippines (CAMPI) and the Truck Manufacturers Association (TMA) indicated sales totalling 18,662 units (passenger cars and commercial vehicles) in January, or 3,015 units more than January 2014, but lower than the 21,320 units sales posted in December 2014.

The group has projected a sales target of 272,000 or an additional volume of 37,000 units to achieve a 15% to 16% growth rate for the entire year, and expects more new product launches and promotion packages within the year to support this target.

powerhouse in Asia. It may have to learn a lesson or two on how to build up its automotive sector from its neighbours, Thailand and Indonesia, says Angelica Buan in this report.

Road map needed Incentives pave the way forward eanwhile, the country has yet to come up he Philippines, with a population of around with a well-polished industry road map to 100 million, has primed itself to becoming a stay competitive, experts say. manufacturing hub in the region, by offering perks In 2012, the Department of Trade and Industry and tax breaks. The government has crafted the began drafting a road map that was targeted for Comprehensive Automotive Resurgence Strategy release last year but has been deferred indefinitely (CARS) programme, which will be launched as some points have yet to be fine-tuned. this year. Under the CARS, the government The absence of a road map could put the may provide US$600 million worth of fiscal and industry at risk of losing vehicle assembly non-fiscal incentives. The operations and related “The absence of a programme is envisaged to downstream manufacturing bring in as much as US$17 businesses, according to road map could put billion savings in import costs the TMA. This could also by 2022. To qualify for CARS, the industry at risk of curtail foreign investors like car manufacturers must have firms that are keen losing vehicle assembly Japanese an annual output of 40,000 on expanding production in locally-built vehicles. the country and increasing operations…”

The Philippine Automotive exports.

Competitiveness Council (PACCI) says that the Toyota and Mitsubishi are reportedly country’s automotive manufacturing industry considering pulling out their production to is one of the sectors that has competitiveness less-expensive Southeast Asian countries like characteristics for development for success in the Indonesia and Malaysia. The two manufacturers world market. In 2009, the council commissioned have a combined capacity of 50,000 vehicles/year. global consultancy Deloitte (Australia) for a Producing a locally assembled vehicle is estimated study on how the country can achieve the 500,000 to cost up to US$2,000 more than importing a CBU, completely-built units (CBUs) output by 2020. The according to industry data. study reported that the target production could China’s Chery Cars International is planning increase the country’s GDP by 6.3%; raise by 10.4% on building an assembly plant (with an initial the average real wages in the Philippine economy; output of 20,000 units/year) in the Philippines boost by 2.5% the employment rate; and increase within the next three years, but will be importing aggregate exports by 12%. parts and assembling rather than fully building The viability of achieving this target is not them locally. farfetched. Latest vehicle sales for January, Thus, car makers require a road map that normally a slow month after a brisk December sales has clear-cut provisions on fiscal and non-fiscal period, report 20% more sales, compared to the incentives, including tax credits and common same period last year. testing facilities for automotive parts makers.

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Injection Moulding Asia Automotive Following Thailand’s footsteps The programme has also encouraged car launches he Philippines is admittedly following Thailand’s in the market. Suzuki recently introduced the largest strategies to catapult the automotive industry. eco-car sedan, the 1.25-litre K12B petrol engine Ciaz.

Nonetheless, if Thailand was the benchmark, not Production of the Ciaz will start in June 2015, at having a road map may handicap the Philippine Suzuki’s plant in Rayong. This will be Suzuki’s third automotive industry, as Thailand has a 2012-2016 eco-car, after the 1.25 litre engine Swift and Celerio.

Master Plan for the Automotive Industry.

Meanwhile, a locally-assembled low-cost car, Nonetheless, Thailand, the “Detroit of Asia”, is the MG3 hatchback, is also hitting the Thai market. currently reeling in close to an 11% year-on-year With prices starting from 479,000 baht, it will rival drop in domestic car sales for February, its 21st eco-cars that qualify for tax incentives. Assembled consecutive month decline. The recent sales figures in Rayong, the 1.5-litre engine, five-door car is narrow Thailand’s chances of hitting its target of introduced by SAIC Motor-CP, a joint venture 3 million cars/year until 2017. Demand is not as between Shanghai Automotive Industry and enticing for Thailand, which has produced less than 2 Thailand’s CP Group. million cars in 2014, according to LMC Automotive.

Still, Thailand is hopeful towards the outcome of Indonesia blazing the trail ext to Thailand, Indonesia has been getting its efforts to pump up exports, which could offset the good reports lately from foreign car makers. low domestic sales.

The country is expected to post vehicle sales growth Automotive exports are reportedly up 14.09% of 5% year-on-year to 1.3 million units this year, year-on-year to 92,440 units in January, owing to according to Frost & Sullivan, which also says the increased exports to Europe, Australia, and North, market is supported by the higher purchasing power Central and South America. of the middle classes as well as the government’s Moreover, the Thai government’s Eco-car initiative to develop the infrastructure. programme, an investment promotion scheme formed Japanese automotive makers, like Nissan and in 2007, is buoying up production of low emission Toyota, are investing in Indonesia, owing to the cars. Eco-cars travel more than 20 km on a litre of country’s expanding industry fuel and do not emit more than “Under the CARS, US$600 potentials.

120 g of carbon dioxide/km as is reportedly planning well as comply with crash-test million worth of fiscal Toyota to invest US$1.6 billion, standards, among other criteria. and non-fiscal incentives following the recent visit of Under the programme, Indonesian President Joko maximum incentives were will be given…”

Widodo to its factory in Japan. offered for integrated car Likewise, Japan’s fourth biggest automotive maker, assembly and key parts manufacturing projects Suzuki Motor Corporation, is also investing an that must have a minimum investment value of estimated US$1.3 billion in Indonesia to expand its approximately US$168 million, and were producing automobile and motorcycle businesses.

100,000 vehicles/year by the fifth year of operation.

Mitsubishi is also venturing into the market, in a Upon meeting these conditions, companies are 51% stake in a joint venture that will run a US$500offered a corporate income tax exemption of 8 years, million plant in West Java’s industrial area of regardless of the projects’ location in Thailand, along Cikarang. with duty-free imports of machinery.

It will produce a 2017 model of a multi-purpose An excise tax of 17% (to drop to 14% in 2016 under vehicle (MPV), a seven-seater vehicle that Mitsubishi the new carbon emission-based duty excise structure) says will be pitted head-on against similar models is levied on eco-cars that have engines smaller than already launched by Toyota, Honda, and Suzuki, in 1,300 cc for petrol engines and 1,400 cc for diesel the previous years. engines, against the 30% duty imposed for regular The firm has broken ground on its first Indonesian 2,000 cc cars. car plant to produce the MPVs, which will be Meanwhile, prominent vehicle manufacturers like exported to Thailand, the Philippines, Africa and the Toyota, Suzuki, Mitsubishi, Honda, Nissan, SAIC, Middle East.

Mazda, Volkswagen, Ford Motor Company and The plant will produce 160,000 units/year when it General Motors, have applied for the 2013-launched begins operations in 2017. Capacity will be ramped Phase Two of the Board of Investment (BOI)’s up to 240,000 units after 2025. That will make the programme for eco-cars.

Indonesian plant Mitsubishi’s second largest in the The fresh round of production in the second region after its facility in Thailand, which produces phase is expected to produce 1.58 million vehicles, 450,000 vehicles/year. according to BOI.

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