Toyota to increase investments to hike local contents of Vios, Innova

MANILA, Philippines - Toyota Motor Philippines Corp. (TMPC) is planning to infuse an additional investment of P450 million to increase the local content of Vios and Innova as part of its campaign to use domestically produced parts for the two vehicles assembled in its Sta. Rosa plant.

In an interview with reporters, TMPC vice chairman Alfred Ty said that they will modernize their stamping plant in order to increase their local content.

The plan of Toyota is to increse its local content to 40 percent.

Investments in the manufacturing of automobiles are subject to income tax holiday (ITH) and duty free importation of capital equipment under the 2011 Investment Priorities Plan (IPP). However, because it is only an expansion of their stamping plant and not a new investment, Ty said he is not sure whether they will be given fiscal incentives.

The capacity of Toyota’s Sta. Rosa plant is more than 30,000 units but is currently producing over 20,000 units annually. When asked if they will be able to double their production in five years, Ty said the intention is to grow but it cannot depend solely on Toyota.

“We are only 35 percent of the market. The other 65 percent also has to grow,” Ty said. In order to widen the domestic market base, Ty said there must be government support.

The government has crafted a Motor Vehicle Development Plan (MVDP) but the implementation has been delayed for more than a year because there is still no implementing rules and regulations (IRR). Ty said Toyota will continue its investments even without the new MVDP.

In an earlier interview, TMPC president Michinobu Sugata said they are planning to increase the local content of their vehicles. “We will increase to at least 40 percent otherwise we cannot be competitive.”

Sugata said the current local content of the vehicles is 20 percent to 25 percent.

Sugata said they will be inviting more suppliers to locate in the Philippines. This will hopefully revitalize the local auto parts industry. The government is trying to encourage autoparts makers to increase their production.

Sugata said this is a good time for the Philippines to encourage Japanese autoparts makers to locate in the Philippines. He said the current exchange rate will make the Philippines a viable investment destination.

Sugata said the appreciation of the yen against the peso coupled with the calamity in Japan boosts the chance of the Philippines to attract more auto parts locators. “To grow the manufacturing business, the most important is the parts. We need parts suppliers more and the Philippines has a very good chance of attracting them,” Sugata told reporters.