News Column

Nissan to Boost Domestic Auto Production in Philippines

Jan. 21, 2013

Ruben D. Manahan 4th

Nissan Motor Philippines Inc. (NMPI) is ready to contribute to the advancement of vehicle manufacturing in the Philippines, with the all-new Almera being eyed to have more locally sourced parts.

NMPI President and Chief Executive Officer Allen Chen said that they are targeting more local parts for the all-new Almera like tires and batteries, among others, since the only locally sourced parts of the sedan are the alloy rims and wiring system.

"Right now, we are trying to get the source here in the Philippines," Chen said during a roundtable discussion with The Times. Only five countries assemble the Almera--the Philippines, China, Vietnam, Malaysia and Thailand.

Chen said that while the NMPI is willing to do its part in assembling completely knocked down (CKD) vehicles in the country, this undertaking is difficult although the firm's plant in Santa Rosa has a capacity of 3,000 units a month.

He said that the issue boils down to cost, noting that electricity rates in the Philippines is very high.

Chen added that the government does not grant incentives like tax holidays to car firms that assemble vehicles and provide local employment.

"Because of free trade agreements, tariff rates are lower. So we also need government support so we can have less expensive parts here," he explained.

For his part, NMPI Vice President for Marketing, Sales and After Sales Lee Junia said that for their next phase, they are planning to localize more parts such as carpet, glass, brake tubes, tapes, among others, for the Almera.

Earlier, NMPI said that it is banking on the new Almera to boost domestic sales this year.

Besides the Almera, NMPI has X-Trail, Teana, Grand Livina and Sentra in its current lineup.

"Based on the Campi [Chamber of Automotive Manufacturers of the Philippines] report, we're averaging 120 a month. For the Almera alone, we are targeting [to sell] 250 a month," Junia added.

The new Almera will be assembled at the Nissan Technopark in Santa Rosa, Laguna. It is being sold in Thailand, United States, China, India, Singapore and Malaysia. The prices for the new Almera in the Philippine market are from P710,000 to P830,000.

Promising market NMPI remains bullish on the Philippine car market given its population of nearly 100 million. Junia said that domestic vehicle sales in 2016, will hit over 200,000 units, which is still a far cry from Thailand's 700,000 units and Indonesia's 500,000 units in recent years.

While importing completely built up units (CBUs) is becoming fashionable among carmakers in the Philippines, Chen said that NMPI would rather increase the utilization of its facility in Santa Rosa to assemble vehicles.

He said that in Taiwan, CBUs are slapped higher taxes that makes it more attractive for car firms to assemble vehicles.

For the next two years, NMPI is eyeing to reestablish its presence in the country with the introduction of sport utility vehicle and multipurpose vehicle models, which will be assembled locally.

As for exporting locally assembled units from NMPI's facility, Chen said that, "it is not impossible."

However, he admitted that it all boils down to cost, and said that "government support is not so strong" to the local manufacture of vehicles in the Philippines.

The car industry is part of the country's manufacturing sector.

Based on data from the National Statistical Coordination Board, the country's manufacturing industry accounted for 25 percent of gross domestic product (GDP) for the first half of 2012. However, manufacturing accounted for about 75 percent of total approved foreign direct investments.

At present, the Department of Trade and Industry (DTI) is crafting a roadmap for the automotive industry, which will increase the assembling of CKDs by about 15 percent a year, starting with 90,000 units this year to 350,000 units in 2022.

For CBU, the DTI is eyeing 156,000 units by 2022.

The organization of auto parts recently said that while CBUs grew from 94,000 in 2010 to 98,000 units in 2011, local CKD production dropped from 74,000 to 67,000 units.

In 2011, the country produced 65,000 vehicle units compared to Thailand's 1.56 million units, Indonesia's 838,000 units and Malaysia's 534,000 units.

The National Economic and Development Authority is eyeing industry roadmaps for various industries like automotive, which will help increase the share of manufacturing the Philippine gross domestic products.

GDP is the final amount of goods and services produced domestically in a country for a given year.


Distributed by MCT Information Services

For more coverage on the automotive industry, please see HispanicBusiness' Auto Channel

Source: (c) 2013 The Manila Times (Manila, Philippines)

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