Car companies have slowly been making an exit from the local automotive manufacturing industry with the latest brand to pull out of the Philippines being Honda. The Japanese brand suddenly announced that it would be stopping the production of the BR-V and City in the country in its Sta Rosa plant. These are the two units in the local lineup that are made in the Philippines. While the news of the shut down came as a shock to many, Honda isn't the first major brand to stop local production. Of note, Ford has also left the country and is sourcing its units elsewhere.
While it’s sad that another automotive brand wants to leave the local production market, the DTI wants to do something about it. The department is planning to put up safeguards in order to incentivize brands to remain and manufacture in the country.
Locally made vehicles currently do not benefit from tariff protection, as such importing brand new vehicles is the more cost-effective option for car companies rather than operating a plant for assembly. The effect of completely built-up (CBU) vehicle importation is hurting the local car assembly industry in terms of auto parts manufacturers and even in the employment sector.
In 2019 the local automotive industry was able to sell more than 400,000 units out of that many vehicles sold only 100,000 were made locally. If you do a little math that means for every four vehicles sold, three of those vehicles are actually imported. Popular places that other brands source units from are Thailand and Indonesia. This is because, by comparison, a vehicle that is made in the Philippines will cost more than an imported one. The result is actually more expensive products for the local market.
Lopez continues by saying that the DTi will be meeting with Honda Cars Philippines Inc. (HCPI), in order to consider an alternative option in order to “minimize the impact of any final decision they will make.” Even with the planned closure in March, HCPI says that its automobile sales and after-sales services will continue as normal.