TOYOTA Motor Philippines Corp. (TMP) said the five-year extension of the Comprehensive Automotive Resurgence Strategy (CARS) program will maintain levels of employment in the auto and parts industries while boosting inbound investment.
“The CARS program is a significant government support as it helps the industry, among others, maintain and promote employment not only to the manufacturers but also parts suppliers and other allied industries,” TMP First Vice-President for Corporate Affairs Rommel R. Gutierrez told BusinessWorld via Viber.
“The extension of the CARS program is a very welcome development. The auto industry expresses its appreciation to the current administration for continuing the government’s strong support to the industry particularly the auto-manufacturing sector.”
On May 19, the Private Sector Advisory Council (PSAC) said that President Ferdinand R. Marcos, Jr. approved its recommendation for a five-year extension of the CARS program, a scheme incentivizing domestic auto assembly operations.
According to the PSAC, the extension will continue to provide tax incentives and support car manufacturers that meet the requirements for investment, production, and technology development.
“CARS has demonstrated its effectiveness and value as a high-end manufacturing operation, which has greatly helped in the creation of jobs, transfer of technology and boosted global competitiveness by supporting domestic auto manufacturing and stimulating investment,” the PSAC said.
Mr. Gutierrez said he expects more investment in automotive manufacturing with “continued industry-government collaboration” adding that the industry is a “significant contributor to the Philippine economy.”
The P27-billion CARS program was introduced via Executive Order No. 182 in 2015, which required three participating car manufacturers to produce at least 200,000 units of a mass-market model in order to qualify for incentives.
Only TMP and Mitsubishi Motors Philippines Corp. (MMPC) enrolled in the program, with production beginning in 2018. Production of an enrolled model is eligible for P9 billion worth of fiscal support.
TMP produces the Vios sedan under the program while MMPC manufactures the Mirage hatchback and Mirage G4 sedan.
Prior to the five-year extension, MMPC was given until this year to meet the required production levels while TMP had until 2024.
Both companies had asked for additional time in meeting the required volumes, citing the effects of the coronavirus disease 2019 (COVID-19) pandemic.
Separately, MMPC First Vice-President Imelda M. Abadilla-Brown told BusinessWorld via Viber message that the car manufacturer cannot comment at the moment because it has yet to receive an official notice from the government on the five-year extension.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the five-year extension will encourage further growth in the auto industry.
“Incentives will help the local sector better compete in terms of production costs and prices of vehicles compared to those produced in other nearby Asian countries, especially the Vios and Mirage models” Mr. Ricafort said.
“The extension will also encourage continued growth in the auto industry and other related businesses/industries in the supply chain, in terms of higher production, revenue, earnings, and employment,” he added. — Revin Mikhael D. Ochave