Tokyo, Japan—Mitsubishi Motors Corp. will transform its plant in the Philippines as the Asean hub for small cars, with annual production of 100,000 units.
Mitsubishi chairman and chief executive Osamu Matsuko said the company planned to increase annual production in the Philippines from an initial target of 50,000 units to 100,000 units over the next six years.
“We are not happy with 50,000 units. With the projected population growth and the increasing capacity to buy automobiles [in the Philippines] , we plan to expand production to 100,000 units,” Masuko said.
He said the Philippines, with a population of more 100 million, was still far from reaching its potential as a mature automotive market. Car sales in the Philippines average 350,000 a year.
“The potential is huge and we want to contribute to the growth of the automotive industry and the Philippine economy,” said Masuko.
Meanwhile, Mitsubishi Motor Philippines Corp. president Yoshiake Kato said Monday the Philippine government should provide more incentives to local parts manufacturers to make them more competitive.
Kato said the current incentives available for parts manufacturers were not enough to bring down the cost of production.
“I think the parts industries should be strengthened. They are the key factors that will push the growth of the local automotive sector. If there are more suppliers, they will be more competition. Quality and cost will improve,” he said.
Mitsubishi officials said despite the opportunities presented by the government’s Comprehensive Automotive Resurgence Strategy, the company was still in the process of convincing parts makers to come to and invest in the Philippines. The Cars program provides incentives to qualified participants.
Kato said the subsidy of $1,000 per unit was not enough to bring down the cost of production and the price of the unit.
The government’s approval of Mitsubishi as a participant in the Cars program is expected to encourage more Japanese suppliers to invest locally.
Kato said the Philippines parts manufacturing sector had yet to reach the stage of maturity amid the lack of players and volume critical to bringing down the cost of owning a vehicle.
“If we have to reduce cost, we have to cooperate with the parts suppliers. The efficiency will trickle down to our factories, as well,” he said.
Mitsubishi has to encourage more Japanese suppliers to invest in the Philippines to comply with the requirements of the program.
The Philippine automotive industry currently produces 300 parts out of the 30,000 parts needed for automobile assembly. A technical cooperation analyzing the global value supply chain is important for effective policy interventions of target industries.
MMPC plans to start setting up a press manufacturing or stamping facility in the Philippines for side panels and roof that will involve a P2-billion investment.
Mitsubishi earlier announced an initial capital expenditure of P4.3 billion to jumpstart the production of Mirage, the company’s entry model in the Cars program.
MMPC will stop importing Mirage units from Thailand, once local production starts in January 2017.
Mitsubishi expects to double the number of employees to over 1,500 people under the Cars program.
The government’s Cars program aims to generate 200,000 new jobs, bring in fresh investments worth $1.2 billion, stimulate local demand by increasing vehicle sales to $9.2 billion and effectively implement industry regulations to revitalize the Philippine automotive industry.