||01 Nov 2007
|Opportunity in Business - Sectoral Profiles Revenue Streams - MOTOR VEHICLE PARTS & COMPONENTS
The automotive industry represents a significant portion of global economic activity with extensive upstream and downstream linkages to many diverse industries and sectors. In the past decade, the motor vehicle industry's contribution in output, employment, investments and exports have been increasing. Moreover, the synergy within the industry has strengthened the linkages between the motor vehicle assemblers and the motor vehicle parts and components manufacturers.
Source: Department of Trade and Industry, http://www.dti.gov.ph/Investment_OpportunityInBusiness_SectoralProfiles.php?contentID=3
|The Philippine motor vehicle industry is comprised of two sectors: the motor vehicle assembly and the motor vehicle parts and components manufacturing.The motor vehicle assembly sector is grouped based on the type of motor vehicles, such as passenger cars, commercial vehicles (utility vehicles, pick-ups, vans, trucks, buses, special purpose vehicles) and motorcycles. The Philippines is a left-hand drive market. |As of 28 February 2003At present, the industry is operating only at 40% of its total capacity due to the Asian Financial Crisis.The Philippine motor vehicle industry is principally dominated by Japanese automobile manufacturers: Toyota Motor Phils., Inc., Honda Cars Phils., Inc., Mitsubishi Motors Phils., Corp., Nissan Motor Phils., Inc. and Honda Phils., Inc. Other principal motor vehicle manufacturers are Ford Motor Co. Phils.; Columbian Autocar Corp., Pilipinas Hino Inc. and Norkis Trading Company.
| ||No. of Participants||Total Capacity|
|Passenger Car Assembly||14||221,450 units/yr.|
|Commercial Vehicle Assembly||21||145,950 units/yr.|
|Motorcycle Assembly|| 21||462,100 units/yr.|The year 1996 became the banner year of the industry reaching an industry sales of 88,977 units of passengers cars, 73,118 units of commercial vehicles and 178,095 units of motorcycles (including imported CBUs). With an average industry sales growth of 20%, estimated investments in parts manufacturing grew by P5.4 billion in 1996 alone. Expansions were made in anticipation for the continuing domestic vehicle demand as the purchasing power has surpassed the US$ 1,000 GDP per capita income.The 1997-1998 financial crisis had a drastic impact on the local automotive market. From a peak of 162,095 (4-wheel) vehicle sales in 1996, market sales declined by 10.56% in 1997 and further by 44.65% in the following year. The industry started showing signs of recovery in the last semester of 1999. The downtrend in auto sales in the Philippines was finally arrested in 2000, with prospects for long-term recovery.The top markets for Philippine merchandise exports of motor vehicles are Japan, Thailand, Singapore, Vietnam, Republic of South Africa and Taiwan (ROC).The parts and components manufacturing sector comprises of 256 companies producing various parts and components made of metals, plastic, rubber and composite materials for both the OEM and replacement markets. The principal components manufacturers are Yazaki-Torres Manufacturing Corp. (wiring harness), United Technologies Automotive Phils. (wiring harness), Temic Automotive (Phils.) Inc. (anti-brake lock system), Honda Engine Manufacturing Phils., Inc. (engines), Asian Transmission Corp. (automotive transmissions), Toyota Autoparts Phils. (automotive transmission), Fujitsu Ten corp. of the Phils. (car stereos) and Aichi Forging Co., Inc. (forged parts). By end of 1999, the parts industry contributed investments of approximately P27 billion, employment of 45,000 and export of over US$ 1.1 billion, which has increased more than ten-fold from 1988 level. Total ExportsJapan remains the top market for Philippine-made motorcycle parts and components, followed by USA and Germany. Exports of motor vehicle parts and components for the past six (6) years were as follows:
|Toyota Motor Philippines||Filipino 60% Japanese 40%||P4.9 Billion||1,435|
|Honda Cars Philippines, Inc.||Japanese 74.2%|
|P3.8 Billion||1,014 |
|Mitsubishi Motors Phils.||Japanese 100%||P1.2 Billion||1,338 |
|Isuzu Motor||Japanese 70%|
|Nissan Motor Phils.||Filipino 60%|
|P1.9 Billion ||541|Source: Bureau of Export Trade Promotion
| ||Automotive Parts||Motorcycle Parts||Total |
|1996||US$ 830,821492||US$ 141,112,357||US$ 971,338,849 |
Total Vehicle Sales (Domestic)
Source: Chamber of Automotive Manufacturers in the Phils., Inc.
|Year||Passenger Cars||Commercial Vehicles ||Motorcycles||Total|
|1998||32,134||35,769||170,571 ||238,474 |
Note: Figures include only locally assembled vehicles Business OpportunitiesInvestments Opportunities
Regional Trade Arrangements
- Participation under the MVDP for the assembly of motor vehicles and parts and components manufacturing are open to foreign and local investors.
- Motor vehicle assembly under the MVDP requires US$ 10 million (passenger cars), US$ 8 million (commercial vehicles) and US$ 2 million (motorcycles) in parts and components manufacturing for both foreign and local investors.
- Parts and components manufacturing is listed as an investment priority area and is entitled to incentives (e.g., income tax holiday) under the Omnibus Investments Code.
Manufacturing Free Trade ZonePhilippine Economic Zone Authority, Clark Development Corporation, and Subic Bay Metropolitan Authority offer tax breaks to qualified free-zone locators.Duty Drawback ArrangementsThe refund or tax credit are allowed for duties paid on imported raw materials used in the manufacture or production of articles upon exportation of the same.
- AFTA-CEPT: Motor vehicle items are phased-in into the AFTA-CEPT Inclusion List By phasing-in into the CEPT, the industry can take advantage of the ASEAN market, which has high MFN rates than the Philippines. This will also be in support of the adjustments being undertaken by the industry wherein companies are consolidating their operations in the region as well as positioning their niche products for them to survive and sustain their operations in a liberalized environment.
- AICO: Several AICO arrangements for motor vehicle are already approved and being implemented.
|By: PhilCTTIS Data Center