Toyota to expand production in Philippines

MANILA, Philippines – Toyota Motor Philippines Corp. (TMP) is investing at least 1 billion yen (roughly P405.8 million) to expand its local production capacity in line with its participation in the government’s Comprehensive Automotive Resurgence Strategy (CARS) program.

In an interview Thursday night, newly-appointed TMP president Satoru Suzuki said Toyota Motor Corp. of Japan had already authorized its Philippine unit to join the CARS program.

Suzuki said TMP is set to pour in at least 1 billion yen to ramp up its local production to meet the demands of the program, which mandates a company to produce 200,000 units for a specific model during its six-year model life.

“CARS program requires some additional parts localization so we have to meet such a requirement, and it needs investments so we need to invest a lot of money,” he said.

Suzuki said it would take TMP at least two years of preparation for the program and the investment commitment would be spent gradually over that period of time.

“To increase production capacity is not so easy. It takes time and money. Toyota Global side also has to consider which is the best supply source not only by the Philippines but also including all other countries. This is why it is difficult for TMP alone to decide whether to increase its production capacity or not,” he said.

At present, TMP first vice president Rommel Gutierrez said the firm’s Sta. Rosa, Laguna manufacturing plant is already fully utilized which is why the company plans to increase its production capacity by at least 10 percent more this year.

“We are actually fully utilized. With the CARS program, we may have to adjust. So that investment includes plant expansion,” Gutierrez said.

“The CARS program will run for six years, on the average 33,000 units per year. The incentives will start after you produce 100,000 units. But the 33,000 units per year over a period of six years is average only. If the market demands for more than that then we can accelerate,” he added.

Approved by President Aquino in May last year, the CARS program seeks to encourage local car assembly through incentives and allow industry players to become more competitive.

Under the program, prospective local car assemblers may apply for fiscal support not exceeding P27 billion by locally assembling three vehicle models, or P9 billion per model, with a commitment to produce 200,000 units for each model during its six-year model life.

Last year, TMP produced nearly 49,000 units.

The company sold a total of 125,027 units in 2015, of which 60 percent were imported or completely built-up units while the remaining 40 percent were locally assembled or completely knocked down units.

For this year, Suzuki said TMP is targeting to grow its sales to 150,000 units, higher than the 137,000-unit goal announced earlier.

Suzuki said the Vios, which is expected to be the company’s model for the CARS program, and the recently-launched all new Fortuner would help push TMP sales higher again this year.

He said the company also intends to further strengthen its market share across all players in the Philippines.

In 2015, TMP was the market leader among car makers with local assembly operations, cornering a dominant share of 43.32 percent.