High cost of manufacturing hampers Toyota Phls expansion

MANILA, Philippines - Toyota Motor Philippines Corp. (TMPC) is keeping a strong sales target as well as production target of locally-assembled vehicles for 2012 but is not aggressively expanding its operations this year because of the prohibitive cost of manufacturing.

TMPC vice chairman Alfred Ty said the utilization rate of its manufacturing facility in Santa Rosa Laguna is “getting maximized” with a utilization rate of almost 90 percent.

TMPC currently assembles the Vios and Innova models for domestic consumption. This year, TMPC is spending P1.757 billion for the production of the new Vios. The investment, which will create over 21 jobs, was approved for the provision of income tax holiday (ITH) by the Board of Investments (BOI) during the first quarter of the year.

The local automotive industry is also recovering from slow sales in 2011 caused by problems in the supply chain of auto parts in Thailand, which was heavily flooded in November. 

There were speculations that TMPC would start assembling another model in the Philippines locally, but Ty said there are still no plans for it at the moment.

“It is local market demand that will initiate that. And we are seeing very good prospects, very good signs right now,” he said. “The capacity we have for this year is still sufficient.”

TMPC president Michinobu Sugata said the company targets to assemble 30,000 units this year. It is also keeping its sales target of 60,000 units this year, a carry-over goal from last year.

Sugata said that if production would be increased this year, TMPC would do so by requiring their workers to render overtime work. But for now, it is not likely to enlarge its factory space or hire more workers.

He also said that TMPC is not likely to assemble a new model locally.

“We are planning, but the current difficulty is that the manufacturing cost is so much higher than those of other countries because of the low volume and the lack of government support. With the adequate amount of government support, we can compete (with other countries),” he said.

Sugata said that despite the grant of ITH for the production of the new Vios, TMPC is also seeking tax incentives for the manufacture of automotive parts for domestic consumption.

He said manufacturers of automotive parts that supply domestically should be given incentives to improve the content of cars produced in the country.

“We need more supplies coming in to increase the local content,” he said. “ITH is given only to automobile manufacturers. We need support for domestic market supply (of automotive parts),” he said.

He said that if a third model is to be assembled in the Philippines, it would likely be an SUV and smaller car models which are gaining popularity in the Philippines,

Sugata said that for now, TMPC would focus on the local assembly of the Vios and Innova models.

TMPC yesterday launched the newest version of its Camry, a luxury sedan model.

The new Camry is available in variants with 2.5 and 3.5 liter engines.

The variants are priced as follows: 3.5Q at P2, 082,000; 3.5Q White Pearl at P2, 097,000; 2.5V at P1, 681,000; 2.5V White Pearl at P1, 696,000; 2.5G at P1, 451,000 and 2.5G White Pearl at P1, 466,000.

Available shades are white pearl, silver metallic, beige metallic, gray metallic, medium silver metallic, dark steel mica and attitude black.

TMPC targets to sell 100 new Camry units per month, higher than the monthly sales performance of the previous Camry model of only 70 to 80 per month.

The 2.5 liter engine variant is assembled in Thailand, while the 3.5 liter engine variant is assembled in Japan. Thailand has stopped the production of the 3.5 variant since the flood.

“So many customers are waiting for the new model. This was already introduced in Japan last year and so many people are asking for the new model” said Sugata.

He said the Camry has cornered 30 to 40 percent of the local medium car segment.