A company led by Ayala Corp. and an Austrian group is set to start motorcycle production in the Philippines this month, after securing incentives from the government.
The Board of Investments said it approved the application of KTM Asia Motorcycle Manufacturing Inc. as a new participant under Classification III (motorcycle) of the new Motor Vehicle Development Program.
KTM Asia, a partnership between Ayala Corp. and Austria-based KTM AG, picked the Philippines as its Southeast Asian hub.
“With the Philippines positioned as the Southeast Asian hub for KTM, it is poised to boost its export capacity to address the rising demand among motorcycle enthusiasts in the region and nearby countries like China,” said Trade undersecretary and BOI managing head Ceferino Rodolfo.
Rodolfo said global brand KTM’s decision to venture into and target the domestic market would further intensify healthy competition with the already established brands from Japan and China, thus providing more brand options for local consumers.
KTM is the biggest European motorcycle manufacturer with a 9.6-percent market share across Europe. It is owned Cross Industries AG and India-based Bajaj Auto Limited. In 2015, it sold over 180,000 units with revenues exceeding 1 billion euros.
The Philippine unit will invest P290.6 million in assembly operations and another P114.17 million in parts manufacturing.
“Commercial operations will begin this month of January 2017 from its assembly plant inside Integrated Micro-Electronics Inc., another Ayala Corp. subsidiary in North Science Avenue in Binan, Laguna,” BoI said in a statement.
KTM Asia aims to assemble four motorcycle models with an initial capacity of 10,000 units annually that will double to 20,000 units when fully operational.
It plans to sell 3,000 to 5,000 units yearly for the domestic market while the rest is for export to China, Thailand, Vietnam and Cambodia.
Rodolfo said the local motorcycle segment was one of the fastest growing sub-sectors of the automotive industry in the region, beating the downward trend experienced in other countries. “And the good news is, there’s still room for growth in the coming years,” he said.
The Motorcycle Development Program Participants Association was expecting to surpass the 1 million mark in sales in 2016.
Industry figures showed that from January to June 2016, a total of 544,699 motorcycle units were sold, up 42 percent from850,509 units sold in 2015.
MDPPA expressed optimism that domestic sales could hit up to 2.5 million units by 2020 and the Philippines could even reach or top Thailand as the biggest seller of motorcycles next only to regional powerhouse Indonesia.
The Motorcycle Industry Roadmap envisions an industry with the potential to expand manufacturing and sales operations in the country due to the affinity of the Filipinos with motorcycle usage.