Automotive Manufacturing Industry in Asia

Overview

• The automotive industry is a major economic driver across Asia.
• Japan led the way with major companies like Toyota, Nissan, and Mitsubishi.
• Followed by South Korea (Hyundai, Kia) and China (BYD, Great Wall Motors).
• India has Tata Motors.
• Southeast Asia has seen growth in foreign and local companies.
  • Vietnam: VinFast (electric vehicles)
  • Malaysia: Proton, Perodua
  • Indonesia and Thailand: Major manufacturing hubs for foreign companies like Toyota and Ford.

The Philippines

• Unique in Asia for lacking a major local car brand and significant auto manufacturing.
• Heavy reliance on imported cars, notably from Thailand.
• This contributes to a poor trade balance.
  • 2023 trade deficit: over $52.4 billion USD.
  • Exports: $73 billion
  • Imports: $125 billion
• Key income sources: Business Process Outsourcing (BPO) and Overseas Filipino Worker (OFW) remittances.

Historical Context

• Sarao Motors: Once a significant local manufacturer of Jeepneys.
  • Peak production: 8-12 units daily, up to 20 in some reports.
  • Employed around 400 workers.
  • 1997 Asian Financial Crisis and governmental policy changes led to significant downsizing.
  • Continued operations on a smaller scale, introducing an electric jeepney prototype in 2018.
• Francisco Motors Corporation: Local manufacturer also shifting towards electric jeepneys.
• Almazora Motors Corporation: Manufacturer of truck and bus bodies.

Foreign Investment Landscape

• The Philippines does have some automotive plants, mostly for assembly.
  • Ford Motors: Long history but closed its plant in 2012, shifting focus to more scalable regions.
  • Honda Motors: Closed its plant in 2020 due to low production volume.
  • Nissan Motors: Closed its plant in 2021.
  • Mitsubishi Motors Philippines: Operates a large plant in Laguna.
  • Toyota Motors Philippines: Significant facility in the Toyota Special Economic Zone.
• Plants in Thailand often serve broader Asian markets, unlike those in the Philippines.

Government Policies

• Comprehensive Automotive Resurgence Strategy (CARS) program (2015):
  • Aimed to attract investment and stimulate local demand.
  • Fiscal support began in 2016 with a P27 billion pesos budget.
  • By 2022, resulted in the production of 207,165 units by Mitsubishi and Toyota combined.
  • Claimed to save the country $1.01 billion in foreign exchange and create nearly 110,000 jobs.
  • Despite this, the CARS program hasn't prevented the closure of plants like Nissan and Honda.

Summary

• While the Philippines has made some progress, significant challenges remain.
• Dependency on imports continues to impact the trade balance adversely.
• Future strategies may need to more comprehensively address these economic gaps.