Auto industry sees impact from Ford pullout

Rappler.com
Industry group Campi says the closure of Ford's assembly operations next year will have an impact on targets under a planned roadmap

MANILA, Philippines – American automaker Ford’s pullout from the Philippines starting next year will have an impact on the auto industry’s targets under a planned roadmap, an industry group said Friday, June 29.

“We may have to make some slight adjustments as far as Ford is concerned, especially on exports,” said Rommel Gutierrez, president of the 13-member Chamber of Automotive Manufacturers of the Philippines Inc (Campi), on the sidelines of the launch of the 4th Philippine International Motor Show.

“The roadmap is not yet final we could still make some adjustments on the assumptions,” he added.

Under the planned Motor Vehicle Development Program (MVDP), Campi aims to attain the following targets by 2016: Increase production output to 285,000 vehicles from the 141,616 sold in 2011, and increase exports of completely built units (CBU) to 90,000 and sales of completely knocked down (CKD) units to 195,000.

Ford, the lone volume exporter of CBUs in the Philippines, plans to shut down its assembly plant in Sta Rosa, Laguna in 2013 and just import units for distribution here.

Ford said its plant will roll out the last of the only model it is assembling locally — the Ford Escape — by the end of 2012.

With Ford’s pullout, Gutierrez said the industry will need government support all the more.

“This gives us more reason to strengthen the domestic market before going export. We have been saying this and the government should come in for local production and maintain a balance between CBU and CKD vehicles,” he said.

Why Ford is leaving

This is the second time that Ford will leave the country after doing so in 1976, when the peso devaluation jacked up prices of imported parts and raised the company’s costs.

Ford returned to the Philippines in 1999 and started assembling several models for sale locally and for export to affiliates in the region.

During the administration of former President Arroyo, the company boosted its operations under the original MVDP program, which aimed to grow the industry by reducing taxes levied on raw materials.

But the program was shelved under the Aquino government for its alleged failure to expand export volumes of CBUs.

Industry players, including Ford, have since pushed for the revival of the tax perks.

Gutierrez said they are now in talks with government to “recraft” the MVDP “to entice automotive manufacturers to invest in the Philippines.”

Higher 2012 target

Nevertheless, Gutierrez remains positive about their prospects.

“There is more reason to be optimistic.” Judging from the industry’s 30.7% growth in May, “this is a clear sign that the industry is on the road to recovery and in achieving its targets in the roadmap,” he added.

For 2012, he said Campi will revise upward its earlier sales forecast of between 178,000 and 180,000 units.

He said they will announce the new target in their first-half sales report due in the first week of July. “We are seeing growth.” – Rappler.com