Motor Vehicle Parts and Components.doc


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Motor Vehicle Parts and Components.doc

  1. 1. Motor Vehicle Parts and Components Overview Total Exports Total Vehicle Sales (Domestic) Business Opportunities Overview 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. 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. 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. As of 28 February 2003 At 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.
  2. 2. Assemblers Ownership Investments Employment Filipino 60% Toyota Motor Philippines P4.9 Billion 1,435 Japanese 40% Japanese 74.2% Honda Cars Philippines, Inc. P3.8 Billion 1,014 Filipino 25.8% Mitsubishi Motors Phils. Japanese 100% P1.2 Billion 1,338 Japanese 70% Isuzu Motor P2.0 Billion 900 Filipino 30% Filipino 60% Nissan Motor Phils. Taiwanese 30.8% P1.9 Billion 541 Japanese 9.2% 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.
  3. 3. Total Exports Japan 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: Automotive Parts Motorcycle Parts Total 1996 US$830,821492 US$141,112,357 US$971,338,849 1997 759,692,953 157,281,711 916,974,664 1998 375,387,641 87,705,470 463,093,111 1999 515,863,458 109,707,212 625,570,670 2000 1,012,143,721 34,000 1,012,177,721 2001 954,686,354 203,288 954,889,642 2002 1,166,590,681 96,028 1,166,686,709 Source: Bureau of Export Trade Promotion Total Vehicle Sales (Domestic) Year Passenger Cars Commercial Vehicles Motorcycles Total 1995 65,808 53,392 126,956 246,156 1996 79,673 58,815 126,956 316,337 1997 69,070 51,418 225,138 345,626 1998 32,134 35,769 170,571 238,474 1999 25,130 39,505 168,254 232,899 2001 23,684 52,968 230,000 306,670 2002 21,728 63,858 226,959 312,545 Source: Chamber of Automotive Manufacturers in the Phils., Inc. Note: Figures include only locally assembled vehicles
  4. 4. Business Opportunities Investments Opportunities • 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. Regional Trade Arrangements • 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. Manufacturing Free Trade Zone Philippine Economic Zone Authority, Clark Development Corporation, and Subic Bay Metropolitan Authority offer tax breaks to qualified free-zone locators. Duty Drawback Arrangements The 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.