Car parts makers gear up for hike in assembly

“In the local parts making [industry], there’s already seven confirmed technical licensing agreements that transpired in the last two months… there’s a lot more in the pipeline,” Ferdinand I. Raquelsantos, president of the Philippine Parts Maker Association, Inc., told reporters yesterday.

He did not name the companies but said these are mostly involved in making metal presses, stamping parts, plastic injection and rubber components.

The expected new joint ventures come after the signing in February of a technical assistance agreement between Japanese automotive parts manufacturer Metaltech Co. Ltd. and local parts maker Roberts Automotive and Industrial Parts Manufacturing Corp.

“There’s another six more [joint ventures] being processed,” Mr. Raquelsantos said, adding that the local car parts makers are just waiting for purchase orders from car assemblers before signing licensing deals.

Toyota Motor Philippines Corp. and Mitsubishi Motors Philippines Corp. are expected to ramp up local production as part of their participation in the Comprehensive Automotive Resurgence Strategy (CARS) program.

Spearheaded by the Department of Trade and Industry (DTI), the six-year CARS program, which aims to transform the country into a regional automotive manufacturing hub, offers an incentive equivalent to around $1,000 for each locally made car.

Each participant is required to manufacture locally 200,000 units of a particular car model for the span of the program, which also seeks to develop the parts-making capability of the Philippines’ automotive industry.

“We are being matched with their foreign suppliers,” Mr. Raquelsantos said of Mitsubishi’s plan to assemble the Mirage, the model enrolled by the car maker in the program.

“Right now Mirage is produced in Thailand so they [Mitsubishi] have existing suppliers. Most of them are Japanese-owned companies. Mitsubishi is trying to match us, as local parts makers, to these suppliers so that we can have tie-ups.”

Mr. Raquelsantos said the move was meant to encourage the suppliers to come to the Philippines either to establish a new company or enter into technical licensing agreements.

The CARS program, under Executive Order 182, and its implementing rules and regulations specify that body shell assembly, large plastic assemblies, common and strategic parts will now be done locally.

The program has so far attracted only two participants — Toyota and Mitsubishi — with DTI yet to decide how it will give out the third and last slot available under the scheme. Mr. Raquelsantos said Mitsubishi is considering to pace the assembly of 200,000 Mirage cars by starting with around 22,000 units in the first year, then ramping this up to 40,000-45,000 units in the program’s remaining years. Mitsubishi now assembles the Adventure and L300 models at its plant in Santa Rosa, Laguna. In 2015 the company produced approximately 18,500 units of both models.

Source: BWorld Online