IDEA

The Institute for Development and Econometric Analysis

The Philippine Automobile Industry
Industry Overview
In general, it is safe to say that any country’s automotive industry displays a
strong linkage with its process of industrialization. Upon close inspection, the historical
performance of economies of developed countries such as the United States, Germany
and Japan profess to this claim. According to the Technical Education and Skills
Development Authority (TESDA), the solid role of the auto industry to industrialization
could be seen in 4 different points, in a global scope.
First, it is one of the biggest industries worldwide in terms of economic value. In
the 1990s, its production value reached more than $1 trillion and the total production
was estimated at more than 50 million units per year. Second, it has linkages to the basic
industries and materials such as iron and steel, petrochemicals, rubber, glass, electronic
and other major industries. Third, it makes use of a wide spectrum of technologies, which
is always in a continuous process of evolution as consumers’ preferences for vehicles
change, and fourth, its products are essential for economic growth and development.
Needless to say, from its production processes to the marketing of its products, the
industry exhibits a great deal of connection with (the performance of the) other sectors of
the economy, being highly-intensive when it comes to capital and technology.
The history of the automotive industry in the Philippines can be summarized into
three phases, with the first phase beginning from the rubbles left in the country by the
Second World War, and the third phase ending in the late 1980s, after which the
government began introducing the industry development programs that continued on until
the present.
The Philippine Automotive Industry: A Brief Backgrounder
First Phase
Post Second World War. Recovery from the war required the imposition of
import restrictions on non-essential items to save on foreign exchange.
Automobiles were included in the non-essential item list (most are brought
from the United States as CBUs)
The need for transporting people and produce encouraged the people to
modify the military jeeps left behind by the Americans into mass transport
utility vehicles.
The vehicles were mostly manufactured by Ford and Willys Overland.
Second Phase
1950s and 1960s. A local company, Fabar Inc., started importing semiknocked-down (SKD) and completely knocked-down (CKD) units. There was
a shift from the importation of CBUs to knocked-down units.
The Philippines became the first Asian country to embark on a plan to
localize automobile production from the standpoint of import replacement

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and foreign exchange savings.
Automakers from the United States and Japan had begun establishing local
operations in the form of joint ventures and technical tie-ups. From the initial
government plan of 2-3 assembly plants, plants reached 35 in number.
(which eventually dwindled into 19)

Third Phase

There were 36 different models serving the Philippine market, the size of
which is very little at that time. Nevertheless, the growth potential attracted a
lot of investors, both local and foreign.
1970s and 1980s. The government implemented programs such as the
Progressive Car manufacturing Program (PCMP) for passenger vehicles,
the Progressive Motorcycle Manufacturing Program (PMMP) for motorcycles
and the Progressive Truck Manufacturing Program (PTMP) for commercial
vehicles.
These years were considered as a fruitful decade for the industry, as the
aforementioned programs aimed the promotion of the local assembly of
vehicles and the establishment of manufacturing facilities, the transfer of
technology and the promotion of exports.
Unfortunately, the 1979 oil crisis drove the industry into a recession. Firms
either started going bankrupt or removing their businesses from the
Philippines. This was further exacerbated by the foreign exchange crisis
during the 80s.
Sales dwindled, as well as the number of manufacturers. Between 19831987, about 92.7% of the workforce was displaced.
In a study made by Tolentino and Ybañez in 1983, it was highlighted that the
localization of components led to higher costs for a locally manufactured
vehicle. Nevertheless, it is recognized that the programs above made
significant achievements for the industry.

Source: Technical Education and Skill Development Authority, Region IV

As the economy began to recover in 1987, there was the urgent need to help the
industry get back to its feet. The government began its series of development programs as
substitutes for the past ones, which will then be discussed later in this study.
Structure of the Industry
According to the Technical Education and Skills Development Authority, there are
two main segments in the present automotive industry that can be identified. These are
the a) brand new segment or the formal assemblers’ segment and b) rebuilt vehicle
segment, or the informal assemblers’ segment.
The Brand New Vehicle Segment, in terms of structure, is mostly characterized
by joint venture arrangements between local foreign automakers and local firms. These
partnerships usually save both entities from bearing the entire brunt of high capital
requirements. The Philippine automobile industry is primarily concentrated on the
assembly operations mode. Usually, the foreign firms handle the design and engineering
costs with their more advanced operations overseas, while the local assemblers import the
SKD or CKD kits, unpack these imports and assemble them. The importation of parts and
components is further justified with the fact that these items cannot be produced locally.

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Unfortunately, the insufficient materials available for assembly have also hindered the
industry from being as competitive as its foreign counterparts.
The Rebuilt Vehicle Segment, on the other hand, is primarily involved in
producing low-priced vehicles by using a large proportion of the reconditioned
components to produce the likes of owner-type jeeps, AUVs and PUJs. Players in the
rebuild segment operate at varying levels of vertical integration and may consistently
involve the end-user or customer at each stage of the vehicle’s production. This
involvement is due to the products themselves being predominantly customized.
Figure 1 (Source: TESDA)

Figure 2

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The Production Process
The production process involved in building the running unit involves two
separate processes. These are a) the preparation of the body assembly, and b) the
installation of underchassis and power train components to the chassis assembly. The
outputs of these two independent processes (painted body assembly and chassis assembly
with mounted components) are then merged for final assembly operation. The final
assembly operation involves the installation of mechanical and electrical components and
accessories. Further, upholstery and trimmings are installed into the unit. After all the
necessary components are installed, testing and rectification are performed. The unit is
then cleaned and prepared for delivery.
The following lists the processes for vehicle assembly:
a.

Body Assembly
Mounting on jig
Grinding of rough portions
Preparation and sealing of metal
Application of primer coating
Oven baking and drying

1.
2.
3.
4.
5.
b.
1.
2.
3.
c.

Chassis Assembly
Mounting on jig
Installation of underchassis component
Installation of power train components

Final Assembly
1. Dropping of body assembly onto chassis assembly
2.
Installation of mechanical accessories
3.
Installation of electrical accessories
4.
Installation of upholstery and trimmings
5. Testing of engine
6. Alignment of tires
7.
Performance of road test
8.
Rectification
9.
Finishing of top coat, cleaning
10. Delivery

The following illustrates the basic body structural assemblies and underchassis
assemblies for a motor vehicle.

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For the past year. Inc. which is propelled by gasoline. according to the type of vehicles that are assembled. motor vehicles in the Philippines are classified into three. According to Executive Order 156. passenger vehicles dominate the Philippine market for motor vehicles. the classification of motor vehicles is as follows: Classification I: Passenger Cars Passenger Cars shall refer to any four-wheeled motor vehicles. These are 1) passenger cars 2) commercial vehicles and 3) motorcycles. IDEA Institute for Development and Econometric Analysis. which restructures the Motor Vehicle Development Program (MVDP). . diesel. electricity or any other motive power and principally designed to transport persons and not primarily to transport goods.Source: TESDA Motor Vehicle Classification Basically. with about a 55% share.

ambulances. these firms account for an 80% share in the market for new vehicles. which manufactures G-type transmissions for vehicles such as the LiteAce and Hilux. Toyota Motors Philippines – Considered as a consistent market leader in the industry. and a 70% hold in the commercial vehicle segment with its sale of Asian utility vehicles. They were also credited for expanding the Asian Utility Vehicle (AUV) market in the country with the launching of their Tamaraw FX. Toyota Motors. Industry Players The market for automobiles is dominated by the Japanese manufacturers. Nevertheless. electricity and any other motive power and principally designed to transport persons and/or goods/cargoes. trucks.Classification II: Commercial Vehicles Commercial vehicles refer to any four.or more wheeled motor vehicle. which certifies a firm’s commitment to the highest standards in environmental quality. with most of their sales coming from the SUV and the luxury car segments. . buses. also boasts of being the included in the top three automakers in the world. it has stayed in the automobile market for 41 years. 2. marketing over 16 IDEA Institute for Development and Econometric Analysis. which is propelled by gasoline. sports utility vehicle (SUV). such as light commercial vehicles. they started their operations which placed their Corolla model among the top favorites in the automobile market. Toyota Motors Philippines is also the first auto firm in the country that received the ISO 14001. US manufacturers. As of 2001. Classification III: Motorcycles Motorcycles shall refer to any two. First established as Chrysler Philippines Corporation. diesel. fire trucks and the like. with or without sidecars. Toyota’s export engine is the Toyota AutoParts Philippines. which may be classified under but not limited to the following: utility vehicles. which were eventually used as Mega taxis. their current bestseller is the Revo. which are designed to carry both passengers and goods/cargoes. Asian utility vehicles (AUV). being the largest automobile manufacturer in Japan. Inc.) Light Commercial Vehicles shall refer to vehicles whether four-wheeled drive or not. After being incorporated in the country in 1989 as Toyota Motors Philippines (TMP). 1. is still yet to gain ground. Mitsubishi Motors Philippines – Mitsubishi Motors Philippines is only a part of the larger Mitsubishi group of Companies. the members of which are involved in different industries in various parts of the world.or three-wheeler vehicle fitted with an auxiliary motor. commuter vans and pick-ups. as well as constant velocity joints (CVJs) for passenger cars. on the other hand. and special purpose vehicles (for example.

Isuzu Philippines Corporation – A joint venture of Isuzu Motors Limited (Japan). The Philippine subsidiary also boasts of having received the first annual Best Quality Award from its mother company. Honda Philippines – Honda Philippines remains to be the largest assembler of motorcycles in the country. RCBC and Mitsubishi. Rizal which is capable of producing thousands of vehicles a year. buses and trucks. together with Universal Motors Corporations. Likewise. the manufacture and assembly of motorcycles in the country is dominated by Japanese firms. which had been changed into Environmental and Social Report in 2001. Isuzu’s products include Crosswind. Jointly shared by Honda Motors Philippines. is the production arm of Nissan Motors Co. Honda Cars Philippines – Participating in the Motor Vehicle Development Program. Honda Cars Philippines started its operations in the country on October 1990. Isuzu Philippines Corporation is the result of a long history dating back to 1950. which is its only export market to date. The company has been publishing an Environmental Report since 1998. Limited in the Asian region. Ltd. Its mother company’s alliance with Renault marked the first of its kind between French and Japanese automakers. 3. Their main plant is located in Cainta. Pajero and Mitsubishi Adventure (for the LCV category). the corporation also offers training and scholarship programs to Filipino engineers and students in technological institutions. . when it established in 1973 through a joint venture between Honda Motor Japan and Mariwasa-Distributors Inc. it has 9 dealers in Metro Manila with 11 dealerships in the provincial areas. It dominated the local market in 2004 by cornering more than half of total sales. Their most popular products are the Galant. 4. Mitsubishi Corporation and Rizal Commercial Banking Corp. where its brand first found its way in Philippine roads as a truck brand. Ayala Corporation. wherein both companies cooperate in all major areas of the business. It was renamed to Honda IDEA Institute for Development and Econometric Analysis. Trooper. Fuego. Nissan Motors Philippines – Nissan Motors Philippines. 1. the LVCs. It started its operations during 1995 after changes in management operations from the old Isuzu Motors Pilipinas. The firm produces models such as the Cefiro and the Sentra (Sunny). Lancer (for the PC category). It has 20 dealerships all over the country and exports Crosswind units to Vietnam. Nissan is also known for its environmental policies in conjunction with its production processes. it was known as Mariwasa Honda Inc. A subsidiary of Tokyo-based Honda Motor Co.. Honda Cars Philippines is also known for its relentless pursuit of performing their operations while protecting the environment. Ayala Land Corporation. Inc. Aside from their environmental policies. Carrying on its slogan of “Your Responsible Partner”. D-max and some other passenger vans and trucks... capturing 51%. as well as an ISO 9002 for its rigorous testing methods which assure quality products. 5. such as their multi-million investments in their Wastewater Treatment facility and Universal Carbonizer thermal treatment system.different types of vehicles that encompass four different segments: the passenger cars.

which include Raider 150 and Shogun Pro 125. Kawasaki Motors Philippines – Kawasaki Motors (Philippines) is a subsidiary of Kawasaki Heavy Industries. trains. Suzuki Philippines – Suzuki Philippines is a wholly-owned company of Suzuki Motor Company. It is interesting to note that the company originated from a business of a Filipino family. which was later sold in 1985 to its present mother company. 3. Its motorcycle models. parts and air-conditioners. 2. the company is the exclusive distributor of Yamaha motorcycles in the country. In the country. It was also the first firm to address the demands for motorcycles outside the country. as it began its export operations in 1990 in Guatemala. manufacture. of Japan. the world’s leading motorcycle manufacturer. . is one of the oldest partners of Yamaha Motors Co. engaged in the manufacturing of both automobiles and motorcycles in the country. The latter’s most visible consumer product line is its motorcycles and ATVs business. Ltd. Norkis Trading Company – Norkis. are being sold in about 31 motorcycle dealerships in the country. and is popular for improving its products with regular enhancements.Philippines in 1983 and was tasked to import. owned by the Quisimbings and based in Cebu. of Japan. SELECTED FINANCIAL ACCOUNTS. along with its other product lines including automobiles. and distribute Honda motorcycles and power products. 3. Ltd. Inc. as well as tractors. Consequently. Kawasaki is mostly known for its motorcycle models. Ltd. IN '000 TOP INDUSTRY PLAYERS Manufacture of Motor Vehicles FUCHS LUBRICANTS PHILIPPINES INCORPORATED DEMO POWER PHILIPPINES INCORPORATED FAR EAST INDUSTRIAL SUPPLY AND COMPANY INCORPORATED COMMERCIAL MOTORS CORPORATION MIMINA MOTORS INCORPORATED MILLENNIUM CARS MINDANAO INCORPORATED JAGUAR PHILIPPINES INCORPORATED JAGUAR CARS INCORPORATED JIANSHE MOTORCYCLE INDUSTRIAL PHILIPPINES CORP KEIHIN PHILIPPINES CORP NIDEC PRECISION PHILIPPINES CORPORATION HYUNDAI ASIA RESOURCES INCORPORATED FORD GROUP PHILIPPINES INCORPORATED ISUZU PHILIPPINES CORPORATION MITSUBISHI MOTORS PHILIPPINES CORPORATION HONDA CARS PHILIPPINES INCORPORATED TOYOTA MOTOR PHILIPPINES CORPORATION Manufacture of bodies (coachwork) for motor vehicles METALS ENGINEERING RESOURCES CORPORATION ALMAZORA MOTORS CORPORATION MEGASTAMP INDUSTRIES CORPORATION 2003 TOTAL ASSETS TLIABS SEQUITY REVENUE GPROFIT RE 61136 50176 120264 17166 -59128 33010 103543 118666 29808 118666 -79539 18895 74649 1237659 23277 75134 93700 39891 710374 595174 1137820 408352 1335296 1946263 5991463 3814453 7551592 41095 1256108 156 27000 117861 72322 740788 182858 891696 299834 1136904 1105040 3042563 1573509 3020260 33554 -18449 23121 48134 -24161 -32431 -30414 412316 246124 108518 198392 841223 2948900 2240944 4531332 128179 145175 219790 317074 320774 364443 448863 701897 898610 1383421 5991373 10785886 10864689 15570742 20768956 25614 22320 5793 14057 41528 37933 -94 102296 -108807 160448 1217321 960592 517177 1839697 1681017 6028 -212196 -1954 -2766 -29249 -37288 2952 44888 -59130 2051 96413 -539665 977361 957121 1588858 81645 213193 96145 33884 218672 89637 47761 -5479 6508 104560 197469 199532 17939 34027 11570 -2939 -14788 1705 IDEA Institute for Development and Econometric Analysis. industrial robots and aerospace equipment including military aircraft.

STA ROSA MOTOR WORKS INCORPORATED 138155 METALMAN STEEL FORMING CORPORATION 114896 MEGAPOLITAN MARKETING INCORPORATED 26606 Manufacture of parts and accessories for motor vehicles and their engines BAKERSON MARKETING CORPORATION 32494 SHOSHIBA FILIPINA INDUSTRIA INCORPORATED 111620 BIG OS TIRE CORPORATION 83382 PHILIPPINE PRECISION TECHNOLOGY INC 64348 FORMTECH INCORPORATED 18897 PHILIPPINES MANSHO INCORPORATED 64039 KYOEI KOGYO PHILIPPINES CORPORATION 32794 EMICOR INCORPORATED 138314 HKT PHILIPPINES INCORPORATED 110700 AUTOLIV IZUMI PHILIPPINES INCORPORATED 109788 PHILIPPINE NAKAMURA CORPORATION 68910 REMCOR INDUSTRIAL AND MANUFACTURING CORPORATION 60811 S C KYMCO PILIPINAS INCORPORATED 192044 LINE SEIKI PHILIPPINES INCORPORATED 95831 HOKEI SUBIC CORPORATION 420835 OGAMI CORPORATION 83992 PHILIPPINE HKR INCORPORATED 364523 JABEZ MOTOR CORPORATION 41121 GUNMA GOHKIN PHILIPPINES CORPORATION 191378 ROBERTS AUTOMOTIVE AND INDUSTRIAL PARTS 611353 MANUFACTURING CORPORATION MEINAN PHILIPPINES INCORPORATED 225602 MORIROKU PHILIPPINES INC 279012 JECO AUTOPARTS PHILIPPINES INCORPORATED 145050 AUTOLIV QB INCORPORATED 129467 NORKIS AUTOMOTIVE RESOURCES CORPORATION 297142 PHILIPPINE NAGANO SEIKO INCORPORATED 276673 DAIWA SEIKO PHILIPPINES CORPORATION 793108 TS TECH TRIM PHILIPPINES INCORPORATED 399050 TECHNOL EIGHT PHILIPPINES CORPORATION 501463 TAKANICHI PHILIPPINES CORPORATION 181762 PHILIPPINE TECHNO TAKATSUKI INCORPORATED 256868 KEIHIN AUTO PARTS PHILIPPINES CORPORATION 143201 ZPI PHILIPPINES INC 213299 ADVAN MOTOR INCORPORATED 120484 MITSUBA MANUFACTURING PHILIPPINES CORPORATION 563446 FCC PHILIPPINES CORPORATION 597720 HONDA PARTS MANUFACTURING CORPORATION 1512337 PHILIPPINE ALUMINUM WHEELS INCORPORATED 415977 IMASEN PHILIPPINE MANUFACTURING CORPORATION 489147 TS TECH PHILIPPINES INCORPORATED 520872 LAGUNA AUTO PARTS MANUFACTURING CORPORATION 755196 BRIGGS AND STRATTON INTERNATIONAL EAST ASIA INC 741528 MITSUBISHI CORPORATION 2461556 TRP INCORPORATED 845442 FURUKAWA ELECTRIC AUTOPARTS PHILIPPINES INCORPORATED 1780710 MITSUBA PHILIPPINES CORPORATION 1549190 ISUZU AUTOPARTS MANUFACTURING CORPORATION 2260494 TOYOTA AUTOPARTS PHILIPPINES INC 2623775 ASIAN TRANSMISSION CORPORATION 1813694 TAKATA PHILIPPINES CORPORATION 3500215 JIDECO MANUFACTURING PHILIPPINES INC 3349405 FORD MOTOR COMPANY PHILIPPINES INCORPORATED 4730603 59248 83953 22093 78907 30943 4513 206631 235091 280254 25027 6286 14048 25948 16972 102134 84632 20451 22630 75386 12673 96697 81385 11045 35062 38722 170947 15366 447946 40764 194933 10756 176389 15522 9486 -1250 43897 -3733 -11347 20121 41617 29315 98743 33848 22089 21097 80465 -27111 43228 169590 30365 14989 79480 82461 86635 87306 92138 92782 104290 107707 129291 132530 135306 142623 145728 159465 161217 162578 172084 181167 203797 19300 22985 11221 20006 14920 5731 11992 29436 24002 16606 14858 13115 40804 23259 -22674 31065 40313 10491 18794 1102 -29686 -5441 11535 -4667 -21167 627 3311 -969 41603 11840 0 1984 17937 -20968 12454 11413 580366 134264 205408 87059 98432 266411 116788 515409 40649 149086 80596 222100 103043 157250 84058 66183 43778 366443 258845 121168 183155 233085 636823 448660 513211 30987 91338 73604 57991 31035 30731 159885 277699 358401 352377 101166 34768 40158 56049 36426 497263 553942 1145894 157132 367979 337717 522111 104705 2012896 332231 219947 221273 232414 246107 265152 274882 317419 328833 341778 344193 344501 363135 451537 474440 557422 601894 651550 704663 716543 787335 846474 1158879 1159102 1380543 1439634 11579 58719 43467 53603 43965 20781 60105 -39422 105341 63445 91028 77138 88143 54545 46172 256832 220459 183584 92567 144710 166022 141320 129860 131615 142245 7160 25693 76050 47476 -25712 -14424 45864 -217382 95706 79115 -51419 7 1679696 497048 850126 386709 1152700 552575 2664731 4150413 101014 1052142 1410368 2237066 660994 2947640 684674 580190 1611921 2345937 3397450 3411695 3813211 4785377 5276278 11664491 110760 222639 743795 418965 320789 1759633 202428 600139 -32553 568932 482896 900404 244726 1172728 3557 -371566 IDEA Institute for Development and Econometric Analysis. 1139 -144030 28936 -29541 117431 224536 313303 -16901 146157 112159 261990 59005 41337 . Inc.

Feb.0 percent. Inc.000 2. according to a study done by TESDA. Inc. on the other hand.000 1. 3) pricing.8 trillion higher by 27.2 trillion. These are 1) family income and expenditure.000 4. and CIBI. Demand 2004 Total Automotive Industry Sales (in units) 6. This translates to an average annual increase of 8. Based on the Family Income and Expenditure Survey of 2000. Family Income and Expenditure.TEMIC AUTOMOTIVE PHILIPPINES INCORPORATED Manufacture and assembly of motorcycles MASUDA PHILIPPINES INCORPORATED SUZUKI PHILIPPINES INCORPORATED NORKIS TRADING COMPANY INC KAWASAKI MOTORS PHILIPPINES CORPORATION Manufacture of motorcycle engines and parts thereof JIANSHE PHILIPPINES INCORPORATED PORTA COELI INDUSTRIAL COMPANY INCORPORATED HONDA PHILIPPINES INC 3021485 1461351 1560134 12042601 494508 405040 422670 1010478 1201288 1994832 268801 138010 612711 1570257 153869 872468 588577 424575 503237 1538454 1589024 2849941 121693 152696 267645 301241 27467 570517 184028 85293 50044 152141 2376636 46905 93514 1123432 3139 58627 1253204 86197 204018 1447398 14941 21152 142947 10250 570060 NORKIS INDUSTRIAL AND ENGINEERING INCORPORATED 1202550 1160136 42414 1675470 121341 12299 Source: IDEA. The total family expenditures.000 0 Jan. .7 trillion in 1997. 2) the performance and features of the vehicle.4 trillion level in 1997.8 percent over the P1. up by 25. reached P1.5 percent over the P1.000 Total Passenger Cars Total Commercial Vehicles 5. 4) car-financing schemes and 5) the availability of parts and services (or after-sales). the total family income for was estimated at P2. Inc.000 3. Mar Apr May June July Aug Sept Source: CAMPI The demand for motor vehicles can be summarized into five points. IDEA Institute for Development and Econometric Analysis.

caused by the implementation of the amended taxes on motor vehicles. Inc. According to the BusinessWorld. From its trend. the interior features and in-car entertainment (ICE).On the average. computer-controlled. A downturn on 2004 is most attributed to the full impact of the new taxes imposed on motor vehicles. Sales of passenger cars. . automobile manufacturers take great pains to develop certain aspects of the vehicles. carburetor-linked muscle cars to fuel-efficient. such as the engine performance. The cars in the country have evolved into “gasguzzling.9 percent over the P123.3% share in 2000. Robust spending on the transportation and communication sector is most evident on the third quarter of 2003. Engine performance has improved greatly from its beginnings. camshaft-laden power plants. to a 6.168 in 1997.039 in year 2000. Family expenditure for Transportation and Communication has rose from a 5. The exterior appearance. tires and batteries also increased. motor vehicle parts and accessories. such as the large spaces inside to accommodate a larger number of passengers as well as cargo. electronic-fuel injection-linked.8% share from 1997. IDEA Institute for Development and Econometric Analysis.” Both the interior and exterior features of vehicles has become major consideration among buyers. Percentage Distribution of Total Family Expenditure by Major Expenditure Group 1997 and 2000 (at current prices) Source: NSCB. appeals more to image-conscious owner-drivers. Performance and Features. family income reached P144. increasing by 16. on the other hand. there has been less expenditure on food by most families.

defined as small vehicles that could carry around 4-5 passengers. For the business segment. According to TESDA. such as Toyota Financial Services Philippines. According to the Economist. there is a large potential in the replacement market. The bulk of the Philippine auto market is price-sensitive. Owing to this. the entertainment accessories of today’s vehicles have included CD players. After-sales service/ Availability of Parts and Services. dealers now have their own in-house financial services corporations to help consumers and consequently. to P44. manufacturers/ dealers have come up with financing schemes to assist potential buyers in acquiring their vehicles. the purchase is expected to last a lifetime. There are also in-house financial services provided by dealers themselves. which helps TMPC push Toyota sales by offering vehicle financial packages affordable to the consumers. low interest rates and attractive financing schemes have led to an increase in the number of car loans: outstanding car loans rose by 10. From the typical radio-speaker combination found in older vehicles. Pricing. allowed many families to acquire their own vehicles. The share of loans for the purchase of second-hand cars in total car loans has been rising. Thus. . for the personal market segment. has been continuously developing to meet the audio/video demands of the passengers. Car Financing Schemes. as indicated by the family income structure. the need for spare parts and timely servicing would be of utmost importance. or in-car entertainment. Inc. Hence.ICE.5% in the year to end-June 2003.6 billion (around US$800 million). although loans for the purchase of new cars still account for the majority of car loans. boost their sales. Nevertheless. a vehicle lying idle is wasted capacity and higher operating costs. aside from banks where consumers could avail of loans to make their purchases. since it provided the market with low-cost vehicles that was primarily intended for personal use (though later.) The introduction of the people’s car is actually a component of the government’s liberalization efforts during the 1990s. in general. the purchase of a vehicle is the result of cumulative savings over the years. the availability of cheap spare parts and an efficient servicing network is a must. advanced speakers and even small television sets. as evidenced from the number of registrations involving used cars. As stated before. IDEA Institute for Development and Econometric Analysis. Therefore. The development of the people’s car. The price of the vehicles undoubtedly remains as a very crucial factor in assessing the sales performance of the industry players. it evolved into for-hire vehicles such as cabs etc. according to the Bangko Sentral ng Pilipinas.

Over the same IDEA Institute for Development and Econometric Analysis. Demand is also affected by the country’s increasing population and household size. With the entry of new models and new financing schemes in the market. Before the imposition of the Auto Excise Tax Law. For example. by category.686 are new utility vehicles while only 30. This trend is primarily attributed to the characteristics of AUVs which make them very appealing to Filipino households. consumers are now “demanding for higher quality and better value for money. • In terms of growth rate. 0 n Ja . as well as the rising personal incomes of the Filipinos. can be primarily attributed to the condition of Philippine roads.” • The low rates of car ownership.. the sturdy build and the spacious interior of these utility vehicles perfectly accommodate the large size of the Filipino household. buses. these utility vehicles were relatively more affordable than their passenger car counterparts. • Market share has also been expanding for utility vehicles. motorcycles and trailers share the remainder. Inc. Fe ar M r Ap ay M n Ju e l Ju y Au g pt Se Oc t v No c De • Compared to the demand for utility vehicles. the demand for utility vehicles has been expanding faster than that for passenger cars. 142. the average yearly market share for utility vehicles stand at 31% compared to the PC category’s average share of 16%. Among the registered cars from 1981 to 2003. as well as the preference for utility vehicles. given the state of its infrastructure that has been suffering from years of underinvestment. Trucks. b.032 are passenger cars.845 new vehicles registered during 2003. 2002-2004 Sept 2002 PC SALES 2003 PC SALES 2004 PC SALES 2002 CV SALES 2003 CV SALES 2004 CV SALES 8000 7000 6000 5000 4000 3000 2000 1000 Source: CAMPI and IDEA. Also. . out of 539. demand for passenger cars has remained relatively low over the years.Automotive Industry Sales. Inc.

both utility vehicles and passenger cars experience negative average annual growths at -3% and -9%. essentially made the PC category and luxury cars more affordable for consumers. unless properly addressed. However. new vehicles only account for 12% of the total vehicle registrations. The new excise tax. thus increasing personal incomes and spurring consumption. This can be observed from the drop in the sales of commercial vehicles from the onset of 2004. while the rest are for renewed ones. The imposition of the Auto Excise Tax Law in October 2003 created a bias towards the passenger car and luxury car segments. 45 20 2004 Level and Growth of Motorcycle Sales 15 40 Total Growth Rates 35 10 5 30 Level 0 25 -5 20 Growth Rate Thousands • -10 15 -15 10 -20 5 -25 0 -30 Jan Feb Mar Apr May Jun Jul Aug Sep Oct IDEA Institute for Development and Econometric Analysis. the automobile industry has a high potential for further growth.period. • The economic recovery in the United States and other trading partners of the Philippines will spur the demand for exports. Nevertheless. which revised the scheme from being engine size-based into one based on the vehicle’s selling price. respectively. Over the past decade. some of these infrastructure problems are now being addressed with the help of the private sector through build-operate-transfer (BOT) schemes. as well as improve the level of overseas remittances. however. • The poor condition of the road networks in the country. shifting consumer demand away from utility vehicle purchases. Inc. will remain as a significant contributor when it comes to the sales performance of passenger cars vis-à-vis utility vehicles. this 88% registration share of renewed vehicles show the increasingly growing market for automobile parts and replacements. • Based on historical performance. only 61% of the roads were paved with concrete or asphalt in 2001. Nov Dec . According to the Department of Public Works and Highways.

• Sales of motorcycles showed strong growth over the last ten years as the economy flourished and the purchasing power of the average Philippine citizen increased sharply. as well as the road congestion. Consequently. Firms have recognized this such that they have come up with models that appeal to women or to teenagers. Since then. based on target figures of both industry players and the government. Inc. the distributor of Yamaha motorcycles in the country. • Consumers in developing countries. use motorcycles both for transportation and recreation. it is mostly utilized as a means of transportation especially by messengers. motorcycles have also assumed the status of being a fashion trend.” Last year. have the tendency to buy scooters or lightweight models that entail the most minimal expenses for maintenance. . . motorcycle sales increased significantly from 502. on the other hand. there is the emerging market coming from “solo buyers”. has encouraged motorcycle companies to further expand and intensify their operations. the demand for the heavy and super heavyweight custom. At present. During the 2003-2004 period. only 30% of the market was cornered by non-Japanese motorcycle makers.. Given with a lower income and the primary goal of having cheap transportation. makers are also targeting the youth market. although negative growth was recorded for the years 1997-1998. the demand for motorcycles in developing countries are mostly comprised by that of middleweight and lightweight models (as classified by its engine capacity).000 units. However. As a result. individuals in countries such as the Philippines. Norkis Trading Co. thus the bigger desire to invest in them. it is not surprising that the local market is dominated by Japanese motorcycle makers. • The demand for motorcycles in the Philippine market has already undergone various changes.19% from 1996 – 2002. The tendency to buy bigger bikes usually comes with an increase in income. or a jump of 61% • According to a study by the Stanford Technology Ventures Program. The industry had been significantly affected by the Asian economic crisis. At present. Nevertheless. Although demand for motorcycles is skewed towards business use. • Sales in the short-term for the motorcycle segment is very encouraging. touring and performance models was significantly higher than in the developing countries. observable through the drastic decline in motorcycle sales.450 units from 312. the study says that “ . a big portion of which purchase scooters for commuting or personal use. registrations for new motorcycles have picked up. registration data from the Land Transportation Office shows that new registrations have grown at an annual average of 9. With the 61% growth IDEA Institute for Development and Econometric Analysis. As an example. • The rising price of oil in both the global and local market. is hoping for a shift to motorcycles among car users from the lower B and upper C income classes for the abovementioned reasons. who themselves dominate the global market for these kinds of vehicles. especially in the late 1990s.

. the Motorcycle Development Program Players Association expects the industry’s sales this 2005 to be between 16 to 25% more than what had been achieved last year. Share of Industry Players to Total Sales.5 million units sold by 2008.in 2003-2004. The Board of Investments had set a sales target of 1. although the industry association has a lower figure set at one million units by the year 2010. Inc. 2004 Victoria 1% Eastworld 2% SC Kymco 8% Yamaha 13% Honda 51% Suzuki 10% Kawasaki 15% IDEA Institute for Development and Econometric Analysis.

297 14.038 1.(CBU) Hi-lux .498 Trucks 32 46 41 31 48 31 26 36 30 321 Buses - 2 4 - - 6 2 1 1 16 Pajero (4x2) / (4x4) Adventure Total CV Mitsubishi Total 5.140 1.549 6.33% 1.013 Corolla 524 559 684 597 510 688 707 512 534 5.706 2.388 1.383 MITSUBISHI Lancer Galant .547 26.Diesel (CBU) L300 V/V L300 C/C 2 4 3 1 5 5 2 1 4 27 221 234 173 87 115 143 130 116 191 1.2004 AUTOMOTIVE VEHICLE SALES Jan.181 9.18% Toyota Total 2.158 1.024 1.471 2.874 2.498 1.(CBU)(4x4) Hi-ace .019 1.763 CR-V 2.227 1.245 1.361 2.0 Total Passenger Cars Space Gear .093 11.057 1.58% 1.015 908 1.912 33.448 2.93% 140 155 169 464 HONDA Jazz City 546 471 284 202 334 317 265 153 238 2.724 1 1 1 - - - 1 - - 4 16 26 45 30 30 30 46 32 17 272 39 23 25 10 12 25 37 48 37 256 102 107 134 71 75 108 87 105 104 893 Outlander 42 23 30 30 22 34 21 23 23 248 L200 16 23 21 14 16 6 1 3 2 102 L200 Strada(4x4) 28 31 16 25 23 39 24 17 21 224 340 334 307 146 369 494 411 498 599 3.0 AT/MT (AUV) 17 5 - 1 CR-V 2.203 1.029 21.2. Inc.244 1.81% Tamaraw FX 825 Total CV 1.787 Landcruiser .097 1.365 7 7 Total Passenger Cars Coaster Previa Rav-4 .376 1.214 996 666 1. Feb Mar Apr May June July Aug Sept YTD % Market TOYOTA Vios 524 585 593 547 471 554 727 563 449 5.(CBU) 46.031 820 928 673 965 8.346 1.525 237 337 242 274 253 2.312 12.283 1.892 36 167 55 49 87 58 27 45 73 597 Total Passenger Cars 768 772 672 429 694 578 654 483 712 5.410 30 53 41 41 28 47 25 34 30 329 184 154 239 238 134 195 227 227 126 1.0 AT/MT (SUV) 234 437 324 251 442 324 Accord Total CRV Honda Total 236 1 23.318 1.73% 24 337 242 273 190 190 253 2.81% 830 823 904 636 757 1.(CBU) L300 F/B/WT/AF L300 Exceed .302 2.810 Civic 186 134 333 178 273 203 222 130 232 1.307 2.(CBU)(4x4) 47 34 38 41 32 35 32 35 26 320 133 162 213 184 169 205 130 167 146 1.024 990 7.87% 219 230 170 86 110 138 128 115 187 1.414 2.(CBU)(4x4) Prado .887 19.051 1.201 936 10.077 723 872 1.40% NISSAN IDEA Institute for Development and Econometric Analysis.315 Camry 155 139 111 100 116 104 64 138 110 1037 1.213 1. .186 68 54 26 39 41 137 52 38 15 470 614 884 820 875 384 985 768 632 6.264 956 1.509 3 1 1 3 1 1 1 9 3 23 26 24 34 22 21 23 38 30 27 245 143 135 122 118 125 171 138 154 80 1.

(CBU) 4 - 3 4 3 4 6 4 8 36 VW .69% Asian Total 74 81 45 42 84 102 46 86 92 652 1.22% VW Caravelle 2.01% Rio Total Passenger Cars Sportage .(CBU) 3 5 1 - 3 - 2 2 2 18 Total Passenger Cars 7 5 4 4 6 4 8 6 10 54 VW Caravelle VR6 .31% BMW 74 81 45 42 84 102 46 86 92 652 2.(CBU)(4x4) Columbian Total 0.962 4.(CBU) - - - - - - - - - - 0.01% .4 Synchro .(CBU) - - - - - - - - - - IDEA Institute for Development and Econometric Analysis.57% - - - - - - 259 - - 6. Inc.00% Proton Total 7 5 4 4 6 4 8 6 10 54 0.5 TDI .82% ASIAN CARMAKERS PROTON Audi .(CBU) - - - - - - - - - - VW Caravelle 2.(CBU) - - - - - - - - - - Total CV 0 0 0 0 0 0 0 0 0 0 0.08% 25 35 31 21 27 48 32 34 31 284 1.87% Nissan Total 265 263 357 275 414 504 445 457 618 3. 0.44% COMMERCIAL MOTORS SL559 AMG - S350 - E200 K A/T (CBU) - - - - - - 1 E320 A/T 1 - - - - - - E220 (CKD) CDI - - - - - - - - E240 Mercedes (CKD) - - - - 1 1 - - - - - - - - 0 0 0 1 1 0 0 3 Indent Orders (CBUs) Total Passenger Cars 0 1 2 MB Vito L CDI - - 1 - - 1 - - - 2 SSangyong Musso (4x2) 1 - 0 - - 1 1 1 1 5 MB-100 Van .74% 71 COLUMBIAN AUTOCAR Mazda - - KIA-CD5 - - - - - - - - GTX - - - - - - - - - - - LX - - - - - - - - - - Picanto - - - - - - - - 56 56 15 8 24 19 9 24 11 - 32 142 15 8 24 19 9 24 11 0 88 198 0 0 - 4 - - - - - 4 15 8 24 23 9 24 11 0 88 202 0.17% SCANDINAVIAN MOTORS Volvo SM Total 0.636 Serena QR-V 18 20 33 - - - - X-Trail 192 113 194 151 275 286 210 198 272 1891 Total CV 210 133 227 151 275 286 210 198 272 1.598 5.350Z 1 - 2 Verita 1 2 - - 1 4 3 Sentra Exalta 25 54 54 42 47 52 79 70 102 525 Sentra 20 45 52 70 82 149 121 159 206 904 Cefiro 10 29 22 12 10 15 34 30 38 200 Total Passenger Cars 55 130 130 124 139 218 235 346 1.

Trucks - - - 8 - - - - - 8 Trucks-Indent - - - - - - - - - - Total CV 1 0 1 8 0 2 1 1 1 15 0.LSI / MT 1. CO.51% FORD Total 477 503 620 563 507 659 634 569 616 5. Inc.6 8 -2 9 10 2 11 9 7 37 155 91 GSI / AT 1.(CBU)(4x4) 4 1 10 4 6 2 1 9 Vitara SQ (CBU)(4x4) - 2 4 9 11 5 10 6 9 5 10 69 5N JX/JLX 14 18 27 6 5 21 16 18 18 143 Trucks/Bus 29 21 17 5 3 9 5 5 22 116 Phil-Hino CV 79 128 162 30 45 71 36 47 68 666 1. LYNX .04% Commercial Total 1 1 1 8 0 3 2 1 1 18 0.3 21 12 24 49 26 19 4 - GSI / MT 1. P/U 100 55 84 94 104 131 111 147 171 Terrano(4x4) - - - - - - - - - - Urvan Shuttle 84 81 87 104 91 125 84 109 122 887 Nissan Patrol (4x2) 14 22 21 19 33 49 49 45 65 317 Total CV 198 158 192 217 228 305 244 301 358 2. CORP.233 10.6 15 18 39 38 9 10 8 5 9 151 RS Centennial 16 23 19 15 5 11 16 13 6 124 Sub-Total 116 134 54 62 51 51 85 693 - - - - - - - - - - - 7 63 125 195 2 6 13 -3 1 2 2 4 27 68 72 Ecosport - - Lincoln Town Car / Mustang - - Mazda 3 - Mazda 6 - - Total Passenger Cars 68 74 122 147 51 63 60 116 214 915 Ranger 51 105 91 62 82 89 76 27 61 644 F150 Super Cab(4x4) - 1 - - - - - - - 1 180 143 174 189 142 237 264 256 180 1765 Expedition XLT (4x2) 34 31 33 9 5 4 32 24 20 192 Club Wagon XLT 10 8 17 11 4 5 3 4 5 67 - - - - - 1 - - - 1 134 135 150 131 208 221 151 106 110 1346 6 33 14 15 39 48 36 26 217 Everest Sport Trac (4x4) Escape Mazda CV (Tribute 4x2/RX8) 3.97% 129 127 41 92 253 184 159 201 233 1419 ISUZU PHILS.65% Total Phil-Hino 79 128 162 30 45 71 36 47 68 666 1. . PHILS.03% FORD MOTOR.03% 997 UNIVERSAL MOTORS CORP.41% PHIL-HINO Suzuki Esteem Wagon .6 1 18 12 9 9 10 14 21 28 122 GHIA / MT 1.148 7.201 5.(CBU) Bravo (SK410-KA) Super Carry (SK410-SR/HR) 0 0 0 0 0 0 0 0 0 0 28 79 96 8 19 30 5 9 14 288 - - - 2 2 3 - - 7 4 41 - Samurai (Long Body) (SJ413-LB) - - 1 - - - - 1 Vitara (SE416-JLX) . DMAX IDEA Institute for Development and Econometric Analysis.77% Total CV 409 429 498 416 456 596 574 453 402 4.46% Total UMC 198 158 192 217 228 305 244 301 358 2.6 7 3 13 13 3 1 - 5 5 50 GHIA / AT 1.201 3.

44% 55 45 41 141 Total CV 46 52 27 24 18 62 104 87 79 499 1.11% 10.00% 0. .295 Columbian Total 173 155 166 143 120 152 155 206 142 1.19% Nissan Diesel (T) 10 22 12 6 9 12 11 11 10 103 MAN 14.19% FIL-DAEWOO BV-120 L - - - - - - - Daewoo BF 105L - 2 - 2 8 8 - 6 0 26 Daewoo BV113T - - - - - - - 0 0 Daewoo-BH117L-Indent - - - - - - - - 0 0 2 0 2 8 8 0 6 26 Fil-Daewoo (T) 0 Total Industry 0.68% GENERAL MOTORS Opel Astra 12 13 7 2 - Aveo 9 6 12 7 11 11 81 Optra 113 188 132 132 128 185 1380 Zafira 5 5 7 5 5 3 46 Impreza WRX 2 - - - - 141 212 158 146 144 Total Passenger Cars 167 188 208 Venture 14 15 42 28 34 Silverado 1 - - 1 - SubUrban 2 2 7 7 3 Forester 7 1 Tahoe 54 - 2 199 1563 19 241 9 43 - 9 7 5 4 5 45 6 8 1 5 20 Trailblazer 6.223 FOC 2 - - 10 - - - - 2 14 4X2 87 83 77 64 39 68 69 135 75 697 4X4 14 11 10 10 11 3 4 11 9 83 Carnival/Sedona 10 11 10 5 12 11 16 7 4 86 Pregio .195 587 P/U Crew Cab 55 43 46 77 76 63 96 48 83 Trucks 75 82 57 63 59 58 49 65 83 591 686 670 849 632 848 768 792 886 764 6.412 COLUMBIAN MOTORS CORP.04% FRANCISCO MOTORS CORP. Anfra/Jeep (AUV) 0 0 - - - - Mazda (LCV) - - - - - - Mazda Cab Chassis - - - - - - Francisco Total 0 0 0 0 0 0 - - - - - - - - - - 0 0 0 0 Total Industry 0.24% GM Total 213 240 235 165 230 220 250 231 278 2062 3.00% MAN 13-220 HOCL - 2 - - - - - - - 2 18-310 HOCL 0 2 - - - - 4 - - 6 IDEA Institute for Development and Econometric Analysis. KC 2700 Total Industry 3.50% 2.Trooper(4x2) Highlander AUV 8 11 26 8 19 12 1 1 17 103 419 407 679 392 441 451 487 571 348 4.(CBU) 33 18 38 36 36 37 41 25 21 285 Sorento 17 10 19 12 13 21 14 17 21 144 Sub-Total Kia 161 133 154 127 111 140 144 195 130 1.895 Isuzu Total Total Industry 17.06% 0. Inc.

on the other hand. • The Philippine market is dominated by Japanese manufacturers. although it comprises a negligible percentage of the total automobile production.100 units Source: BOI • According to the Board of Investments. Vehicle manufacturers are come competitive in the SUV segment than in the passenger car and other commercial vehicle segments. Inc.01% HYUNDAI Matrix 32 31 53 31 3 63 59 41 Coupe 28 20 4 3 4 7 19 2 87 1 - - - - 1 - 2 XG Sonata Total Passenger Cars 32 345 - 1 - - - 1 1 1 61 52 57 34 7 72 79 44 32 438 4 1. Nevertheless. where the local firms are mostly concentrated/ restricted on assembly operations. of Participants Annual Output 14 21 21 221.450 units 145. the more expensive Ford SUVs and vans are wellreceived by the local market.44% 116 138 147 198 198 300 302 235 190 1824 2.S. • U. the industry is characterized by cut-throat competition. Both IDEA Institute for Development and Econometric Analysis. and usually working under the flagship of their foreign mother companies.950 units 462.Man 0 4 0 0 0 0 4 0 0 8 Total Industry 0. with only 40% of its total capacity being utilized by its players.15% HYUNDAI Total Source: CAMPI Supply Annual Production of the Automotive Industry (As of 2003) Passenger Car Assembly Commercial Vehicle Assembly Motorcycle Assembly No.000 units. There are 14 participants for the Passenger Car Assembly segment and 21 participants each for the commercial vehicle and motorcycle segments. . the Philippine automobile market is served by a total of 56 firms engaged in motor vehicle assembly as of 2003. In spite of the Filipinos’ lower purchasing power.80% Starex 55 86 90 164 191 228 223 191 158 1386 Total CV 55 86 90 164 198 228 223 191 158 1386 3. under the Motor Vehicle Development Program.02% 0. as major industry players compete for shares in the market that has a base of less than 19. • The Philippine motor vehicle industry is less developed than that of its ASEAN neighbors. are known to dominate the luxury car segment. American and European carmakers.

• As the competition intensifies in the market.235 new units registered in 1997. As industry is forecasted to have stronger sales growth. Incentives are to be given to carmakers that will put up export-oriented manufacturing plants.881 units compared to only 476. there is also a large remaining segment in the market to penetrate. the government is focusing on the export potential of the industry. new products and the expansion of a firm’s overseas market. rivalry in the motorcycle segment will increase in the future. • Likewise. In line with this. Nevertheless. and firms will have to compete over consumers as they continue on demanding for higher quality and better value for money. Unfortunately. • One reason for the 2004 drop in sales of commercial vehicles is the inclusion of Asian utility vehicles in the new excise tax scheme. . automotive parts and components. Registration figures for this year were at 490. is partly caused by the fact that it has been characterized by protectionist policies as early as 1972. Some. participation in the Motor Vehicle Development Program (MVDP) for both the assembly of motor vehicles and parts. • The current condition of the industry. However. high domestic vehicle demand and high purchasing power of consumers. It was only during 2002 when sales were able to surpass the 1996-1997 levels. Prior to the imposition of the IDEA Institute for Development and Econometric Analysis. • Given the high potential for market growth. such as the Renault-Nissan Alliance and Daimler Chrysler-Mitsubishi partnerships. the government has recognized the need for liberalization as a part of its wider reform program for the Auto Industry. and components manufacturing are actually open for local and foreign investors. aside from building its domestic capacity. the 1997 Asian financial crisis became a significant barrier to some of the government’s reform commitments. however. It is interesting to note that the year 1996 proved to be an outstanding year for the industry as its performance was strongly backed-up by high investments. Some firms are already eyeing the opportunities overseas. tie-ups between firms have become a familiar phenomenon in the industry. These company tie-ups are viewed as access points to improved technology and production processes. • Suffering from low capacity utilization and thriving on limited export capacities. as the market for these vehicles show promising signs of further growth. creating their own niche and exploiting the opportunities presented by the “solo” buyers. competition in the auto industry is expected to intensify in the medium-term. are focusing on the domestic market. Inc.the motor vehicle assembly and the automotive parts and replacement segments experienced a large drawback with the 1997 Asian Financial Crisis and have been enjoying moderate growth since then. being small and fragmented. liberalization measures had been undertaken such as the lifting of tariffs and abolition of trade barriers on the import of completely built-up units (CBU). and readying their expansion and export plans.

and NSCB. Inc. This negative growth is considered as the remaining effects of the 1997 Asian financial crisis to the auto industry. In terms of trade performance. IDEA Institute for Development and Econometric Analysis. defined as those that have a seating capacity of 10 people or more.Auto Excise Tax Law. the automotive parts and components manufacturing sector has exhibited an export surplus for the past four years. 2002 2003 . are exempted from the motor vehicle excise tax. Motor Vehicle Registrations 1981-2003 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1981 1982 1983 1984 1985 Source: IDEA. Inc. AUVs. the Philippine market for automotive parts and components has been performing unimpressively for the past five years. the new law now taxes Asian utility vehicles based on their selling price. the market for parts and components has a high growth potential. However. Based on motor vehicle registration data. and competition is high among more than 200 firms. Auto Parts and Components Manufacturing The Philippine has become some of the Japanese automaker’s production base for auto parts and components aside from assembling and marketing motor vehicles. from 1997-2001. 1986 1987 1988 1989 1990 1991 1992 Cars New Utility Vehicles New Trucks New Buses New Motorcycles New Trailers New 1993 1994 1995 1996 1997 1998 1999 2000 2001 Cars Renewal Utility Vehicles Renewal Trucks Renewal Buses Renewal Motorcycles Renewal Trailers Renewal According to the Department of Trade and Industry. The overseas market is also being tapped as firms forge tie-ups with foreign players in efforts to promote their products to a wider market. as the number of components manufacturers increase.

flooring and acoustic systems. 2. Peugeot. . . Volvo. TEMIC Automotive Inc. Citroen. It is also a Fortune 500 company headquartered in Southfield. Its Philippine arm. the Philippine production of which accounts for 41% of Temic Germany’s total global production. Established in 1973. door panels. engines and axles and the machining of transmission gears.A partnership between Germany’s AEG and Telefunken Electronics. the company has 90% of its produce shipped to the export market. L. particularly in Europe. battery cables and other automotive parts. the company is focused on the production of electronic components and systems for electronic brake systems and body electronics. USA. BMW.Industry players 1. it is involved with the manufacture of parts and manual transmissions for Honda automobiles within the ASEAN region. Laguna. Torres. Yazaki-Torres Manufacturing Inc.). followed by the production of manual IDEA Institute for Development and Econometric Analysis. Lear Corporation – Lear Corporation prides itself in being one of the largest independent automotive suppliers in the world. The company makes wiring harnesses. It is the leading manufacturer of electronic sensors and semiconductors for instrument clusters such as speedometers.. Its business lines include the assembly of manual transmission. Inc. it started its manufacturing of automobile service parts in January 1994. A product of Filipino-Japanese partnership. General Motors. The completion of its latest plant in 2003 is expected to boost production and enable Honda to supply their products to their automobile plants. 3. Audi. headliners and instrument panels. oil and gas gauges. automobile instruments. – Considered as a wiring harness giant in the Philippines. Lear Automotive (EEDS) Philippines. and also one of the leading suppliers of automotive interior systems in both the automotive interior market and the automotive electrical distributions systems market. Established in 1992 at Laguna Technopark. is located in Mactan Economic Zone II in Cebu. it is the engine and transmission manufacturing arm of Mitsubishi Motors Corporation (MMC) in the country. (formerly United Technologies Automotive Philippines Inc. Honda Parts Manufacturing Corporation – A subsidiary of Honda Motor Company in the Philippines. Their consumers include Daimler-Chrysler. and Hyundai. tachometer. and a partnership between MMC and Nissho Iwai Corporation of Japan. 5. but also contributes to the country's exports of industrial goods. Inc. It is also known for its automatic breaking system (ABS). Volkswagen. ATC is popular for its manufacture of gearboxes and automatic transmission units. Renault. Asian Transmission Corporation – Located in Canlubang. 4. it was established in September 1973 as a joint venture with F. Michigan. The company not only promotes employment in the Philippines. Its products include commendable products for all five principal segments of the automotive interior market: seat systems.

By capitalizing on its highly competitive production facilities in Asia. depending on the type of materials used in the manufacturing process. side moldings. Plastic Parts. steering gear. Bound Bumper 11. Backlite Weather strips 7. These products include tires. car stereos and speakers. the main market of the plastic parts manufacturers is the replacement market. rubber hoses for radiators. This sector consists of the manufacturing of wiring harnesses. The metal parts group usually consists of small-type bracket and clips and metal-based components such as clutch pedals and battery trays. which produce both low cost and high quality components. the auto parts and components market can be classified into three. Aluminum Wheels 3. Alternators & Diodes 2. fabrication and assembly. Manufacturers usually have factories with world-class level of technology and employing skilled workers. weather strips. 15. and machining. According to the Department of Trade and Industry. Honda’s goal is to meet the increasing demand for automobile production while further enhancing its global competitiveness. Battery 9. Backlight 6. Like the rubber parts manufacturing sector. Brake Tubes 16.transmissions on July 2002. Brake Pedal Assy. Batteries 8. Assist Grip 5. . assorted molded rubber products such as pedal pads. stamping and fabrication. the component manufacturing arms of the vehicle assemblers belong to this group. heaters and air-conditioners. Rubber Parts. Brackets 12. 1. Among the parts and components manufacturers. Battery Carrier 10. Inc. glass runs. bumper bounds and oil seals. plugs. Brake Drums 13. The main market of the rubber parts manufacturing is the replacement market. Arm Rest & Visor 4. The automotive parts manufacturing industry of the Philippines lists the following 91 types of automotive parts that were integrated into the high-volume car models in the Philippines. More so. horns. tube/boot. the classification of these parts is as follows: Metal Parts. Electrical Parts. this sector has the largest number of companies compared to the rubber and plastics group. These parts include small plastic-injected parts and fiber-reinforced plastic components. lamps and relays. Bushings & Rubber Parts IDEA Institute for Development and Econometric Analysis. Brake Hoses 14. small motors and alternators and semi-conductor controls for anti-brake systems. The metalworking sector can be further subdivided into three subsectors: foundry and forging. Parts and Components Classification In general.

Pedal Pad 52. Trunk Weatherstrips 84. Clutch Pedal 23. Front & Rear Door Glass 33. Roof Headlining Support 68. Lower Radiation Shroud 46. Moulding 48. Rear Seat Back 61. Rear Seat Rear Seat Cushion 64. 34. the following components were being manufactured in the Philippines: IDEA Institute for Development and Econometric Analysis. More so. Radiator Grille 57. Small Rubber Pipes 75. Seat Track Open Lever 73. Windshield 86. Mufflers 49. Carpet & Silencer Pad 18. Roof Cover & Moulding 66. . Gears & Shafts 39. Head Rest 40. Exhaust Pipes 30. Seat Track 72. 60. the main pressed components were limited to the technically simple pieces. Tires 78. Emblem & Name Plate 28. Trim Board 82. Stripe 76. Hub Cap 44. Panel Glass 53. Door Weatherstrips 27. Fusible Links 38. High Tension Cables 41. Radiator Hoses 58. Radiator Shroud 59. Wire 88. Trunk Matting 83. Forgings 32. Seat Covers 71. Hood Seal 42. Window Glass Run 85. Rear Seat Back Striker 63. Coil Springs 24. • The components manufactured in the country were generally limited to the small and a few medium-sized parts. Rubber Hoses 70. Clips and Clamps 21. Rear Seat Stop 65. Center Pillar Garnish 19. Exhaust Manifolds 29. Mat & Silencer Pad 47. Small Metal Brackets 74.17. Weatherstrips 54. the Motor Vehicle Development program also aims to develop a viable automotive parts manufacturing industry. Flywheel 31. such as income tax holidays. Horn 43. Windw. Wiring Harnesses • Parts and components manufacturing is listed as an investment priority area and is entitled to incentives from the government. Torsion Bar Cover 80. Front Seat Assy. Room Partition Board 69. Roof Headlining 67. Package Tray Trim Panel 51. Transmission Case 81. Inc. Qtr. Interior Lamps 45. Front Seat Cushion 36. Front Seat Back 35. Door Opening Trim Mould 26. Clamps 20. Torsion Bar 79. Strut Insulator 77. Qtr. Rear Seat Back Board 62. As of the mid-90s. Disc Brake 25. Furthermore. Oil Dip Stick 50. Radiator & Cap 56. Windshields Weatherstrips 87. Clutch Housing 22. Rear License Plate Brkt. Quarter Trim Panel 55. Fuel Pipes 37.

seats. 27 . Nevertheless. local auto parts makers are estimated to supply less than 30% share of the OEM market. 70% of the produce follows two directions – the Original Equipment Manufacturing (OEM) market. lamps. with this share being valued at $US 1. automotive parts and components imports accounted for 3. abs control. Malaysia. the top ten Philippine export markets of automotive parts and components (FOB value in $US) is led by Japan. accounting for 4. rubber hoses and small plastic parts o Mechanical parts: transmissions o Cast and forged components: gear blanks. Australia. relays and fuses Pressed components: mufflers. armrests Electrical system: wiring harnesses. Thailand. transmissions. • The cost component of motor vehicle parts and components manufacturing can be seen as follows: IDEA Institute for Development and Econometric Analysis. the industry is mostly dominated by small and medium-sized companies. gear-boxes. leaf and coil springs Interior: carpeting. Ironically. • Parts and components imports usually consist of Completely-Knocked Down (CKDs) packs and components. aluminum wheels. Germany. • Consisting of more than two hundred parts and components manufacturers. and the replacement market. exports were registered at $US 1. batteries. Great Britain and Northern Ireland. pedals o Rubber and plastic components: fan belts.3 billion. brake drums o o o o • In terms of trade. cornering about 31% of the total share in 2001. seat frames. • Japan remains as the Philippine’s top supplier of automotive parts and components. steel rims. such as wiring harnesses.5% share of total imports. On the other hand. seat adjusters.Suspension: tired. Indonesia. These are then followed by Thailand.3% share of the country’s total merchandise imports in 2001. whereas the remaining share is exported. radiators. • For the period 1997-2001. oil and air filters. as well as the replacement market. the parts and components export consist of only a few products. For the same period. Exportation activities are largely undertaken by the big companies. brake disks. batteries and assorted body parts and accessories are also imported.1% share in the total automotive parts and components exports of the country. alloy wheels and players. Indonesia and Taiwan. Canada and Taiwan. which account for more than 50% of the country’s total imports. Inc. which account for 50. tires. It is followed by the United States.31 billion.

These are plastic.Estimated at 30% of Actual Imports of CKDs/Components/Parts IDEA Institute for Development and Econometric Analysis.826 223. The partnership could also mean technology transfer and production management assistance from the assembler to part makers. there are also big importers who purchase replacement parts directly from foreign suppliers.606 6.NSO raw data 2 Local Parts . On the other hand. services are composed by those given by both the industrial and non-industrial sectors. interest expense.593 520. On the other hand. 28 .08 Source: 1 CKD components/ parts imports . GR Total Estimated Consumption 1. Other cost components include the fuel and electricity.691 239. the OEM market is attractive to part makers because of the regularity of the business. metallurgical coke and other materials needed for the production process.089 158.874 356. chemicals. Getting a contract to supply an assembler will take some time.812 249.062 107. there are general import practices prevailing in the market.08 Estimated local parts manufacturers' sales 2 335. who are concentrated to only a few players. a long partnership is assured.723 6.419 743.08 Actual Imports of CKD/Components/Parts 1 781. Estimated consumption of components/parts for OEM Markets (In CIF $US thousand) 1997 1998 1999 2000 2001 Ave.280 559. but once it has been established. since the bulk of the raw materials are unavailable in the domestic market.971 799. They are the ones who deal directly with the importers. steels.964 528. • The importation of replacement parts is concentrated to a few players. Importation is usually done by indentors. • According to the Department of Trade and Industry survey.Cost distribution of motor vehicle parts and components manufacturing Materials and supplies 79 Services done by others 6 Others 6 Indirect Taxes 3 Fuel and Electricity 2 Interest Expense 2 Rent and storage 2 Research and development 0 Source: DTI • The most important cost component for this manufacturing sector goes to the raw materials. indirect taxes and rent and storage. Inc. On the other hand. most especially to its importation. Transportation costs and duties also add to the costs.116.875 370.117 6.

500 units $10.000 each 2.5 million. and S100 per unit for the fifth year.000 units $5. exports of auto-parts and components are projected to rise to $2. However. motor vehicle exports gres by 22.000 each 5. Inc. the Philippines supplies 20% of the world’s wire harnesses.Trade performance The Expanded Philippine Automotive Export Program Category Regular CBU Exports (high-volume direct CBU exports) Developmental CBU exports (completely new basic models for exclusive export to at least the ASEAN) Niche CBU exports (low-volume exports.000 units $5.000 each • The participants of the Motor Vehicle Development Program are entitled to a tax credit for five years: $400 per unit for the first two years.000 units.000 each 2. IDEA Institute for Development and Econometric Analysis. • Starting 2006 until six to seven years after. basic or variant models must not be in local production currently High-value. • The value of exports is estimated at $ 200 million to $240 million yearly while the value of local parts purchases is projected at P5.000 to 250. the Department of Finance (DOF) raised concerns regarding the possibility of losing tax revenues as a result of the said program. Forty thousand workers are employed in the car assembly and parts manufacturing. the Philippines will increase CBU production to 200. • To date.500 units $10.75 billion in the next three years. 29 . of which two-thirds will be exported in the ASEAN countries.2% primarily due to a 16. In February 2004. low-volume exports Total Annual Export Volume Freight on Board (FOB value) 10.2% growth in wire harness exports valued at 89. • The expanded export program is geared towards auto parts and CBU exports for a steady growth of the auto industry. $300 per unit for the third year. 200$ per unit for the fourth year.5 billion yearly. • Meanwhile. In addition. it will also boost the job prospects in the auto industry.

000 0 1997 1998 1999 2000 2001 Source: IDEA.000 30. 30 .000 30. total RP Imports 1997-2001 (FOB value in $US Millions) 40. Inc.000 20. Inc.000 35.000 25.000 15.000 5. Inc.000 Total RP Exports Automotive Parts and Components 35. total RP Imports 1997-2001 (FOB value in $US Millions) 45.000 20.Value of RP Imports of automotive parts/components vs. and DTI IDEA Institute for Development and Econometric Analysis.000 25.000 10.000 Total RP Imports Automotive Parts and Components 40.000 10.000 5.000 0 1997 1998 1999 2000 2001 Source: IDEA. and DTI Value of RP Exports of automotive parts/components vs.000 15.

Direct automobile loans are made to the consumer to purchase an automobile and are secured by a chattel interest in the auto. This type of consumer lending typically has a maturity of 8 months. and BSP One of the primary sub-sectors of consumer financing is the auto-loans sector. the dealer packages the loan in bundles and sells them to the banks. are made with the assistance of automobile loans. although maturities of 60 months and longer are not common. or even of second-hand cars. Based on their historical performance. 31 . these loans tend to have higher delinquency rates than direct loans since banks relatively have stricter and more competent pool of credit analysis. Usually. Inc. IDEA Institute for Development and Econometric Analysis. The bank then either accepts or rejects the applicant. the domestic demand for auto loans has been on the rise as the local banking industry reported an improvement in its auto-loan business despite economic slowdown.2004 Q1) 40 30 20 20 01 20 Ma r 01 -J 2 0 un 01 e -S 20 ept 01 -D 20 ec 02 20 Ma r 02 -J 2 0 un 02 e -S 20 ept 02 -D 20 ec 03 20 M a r 03 -J 20 un 03 e -S 20 ept 03 -D 20 ec 04 -M ar 10 Source: IDEA. Since automobiles are too expensive for most individuals to purchase with cash. Under this arrangement. most new car purchases.Financing: Auto Loans AUTO LOANS Quarterly Total (in billion Php) 50 (2001 Q1. Indirect automobile loans are made by the auto dealer. banks have come up with innovative car loan packages to further entice the consumer market. Alongside the number of car models rolled out every year in the country. Automobile loans may be direct or indirect. the dealer collects the required information from the consumer and furnishes it to the bank. Inc.

Next in line are the commercial banks themselves. Inc. CAMPI and BSP IDEA Institute for Development and Econometric Analysis.000 1.000 2.000 4. and BSP 45 40 35 30 25 20 15 10 5 0 Thrift Banks 1/ The biggest players in the auto loan sector are the local thrift banks and thrift bank subsidiaries of commercial banks.2004 Q1) Auto Loans Vehicle Sales Source: IDEA. The Auto Industry 10.000 9.AUTO LOANS by Financial Institution (in billion Php) (2001 Q1. Inc.000 - 50 40 30 20 10 0 Total Vehicle Sales 60 20 0 20 1 -M 01 a r 20 -J u 01 ne 20 -S e 01 pt 20 -De 0 c 20 2 -M 02 a r 20 -J u 02 ne 20 -S e 02 pt 20 -De 0 c 20 3 -M 03 a r 20 -J u 03 ne 20 -S e 03 pt 20 -De 04 c -M ar Auto Loan (in million Php) (2001 Q1.2003 Q1) D ec M ar -0 3 Se pt Se pt ec M ar -0 2 Ju ne D M ar -0 1 Ju ne Se pt Univ ersal and Commercial Banks D ec M ar -0 4 Source: IDEA. Inc.000 6.000 5.000 7.. 32 .000 8.000 3.

Inc. 33 .Source: Bangko Sentral ng Pilipinas IDEA Institute for Development and Econometric Analysis.

Some of the salient points of Executive Order 156 include: o The banning of the importation of all types of used motor vehicles. o The restructuring of the current excise tax system for motor vehicles. except those that may be allowed under certain conditions o The restructuring of the Most Favored Nation (MFN) tariff rates for motor vehicles and their raw materials. parts and components. such that its original target (from being PCMP) was car assembly based largely on locallyproduced car contents. This category covers passenger cars with engine displacement between 1500cc and 2200cc. Inc. This category includes the “luxury cars” with engine displacement greater than 2200cc. the main CDP category. This category includes passenger cars with engine capacity of up to 1500cc. passenger cars were classified into three categories: Category 1 or the “people’s car” category. IDEA Institute for Development and Econometric Analysis. o The continuing application of the AICO (ASEAN Industrial Cooperation) scheme as maybe adopted by the Association of Southeast Asian Nations (ASEAN) consistent with the implementation of the ASEAN Free-Trade Agreement – Common Effective Preferential Tariff (AFTA-CEPT) o The provision of incentives to assemblers and parts and component makers for the export of CBUs and parts and components. Under the CDP. authorities have pushed for the restructuring of the Motor Vehicle Development Program (MVDP). Category II. fair and stable tax structure.Issues and Concerns Motor Vehicle Development Program The government has relentlessly pursued in its efforts to rebuild and develop the industry. Category III. parts and components. Car Development Program (1987) Replaced the Progressive Car Manufacturing Program (PCMP) This program was aimed in the promotion of passenger car manufacturing. discussed as follows: I. As such. with the end view of creating a simple. at rates that will encourage the development of the industry. as allowed by law and international commitments The Motor Vehicle Development Program is actually the collective name for three development programs. 34 .

All AUVs up to 3000 kgs. There was no real product differentiation between LCVs and AUVs except that the latter was supposed to have a higher local content of manufactured components. Category I. All LCVs up to 3000kgs. All vehicles from 3001 kgs. There were four categories to this program. GVW. trucks and buses. Motorcycle Development Program (1998 Replaced the Progressive Motorcycle Manufacturing Program (PMMP) Investment Requirements • • • • • • • Car Development Program (CDP) Category I and II participants must earn 50 percent of their foreign exchange requirements for CKD imports through the generation of parts’ exports earnings.II. Category II. GVW. which can be 100 percent foreign owned.5 percent for commercial vehicles. CDP Category III must earn 100 percent of foreign exchange requirements in this manner. All vehicles from 6001 kgs. to 18000 kgs. the BOI requires applicants/participants to establish a new plant. Commercial Vehicle Development Program (1988) Replaced the Progressive Truck Manufacturing Program (PTMP) This program aimed to revitalize the commercial vehicle manufacturing industry with emphasis on rejuvenating the production of commercial vehicles such as the Asian Utility Vehicles (AUVs). Category III. Prior to the issuance of a Certificate of Registration. Inc. Foreign exchange self sufficiency regulations require assemblers to earn 5-100 percent of their foreign exchange needed for the importation of CKD kits through the promotion of CBU exports. These were composed of the light trucks and mini-buses. The foreign exchange requirements for CKD kits are 50 percent for passenger cars and 7. These SUVs come in the form of wagons. The Philippine Board of Investments (BOI) may cancel the registration of a participant if the company fails to meet at least 20 percent of its production commitment in a one year period. pick-ups. III. IDEA Institute for Development and Econometric Analysis. to 6000 kgs. GVW. light commercial vehicles (LCVs). 35 . GVW. Category IV. crewcabs and jeepneys. The focus was also on manufacturing parts and components locally. These were composed of the heavy trucks and buses. The Car Development Program requires an investment of $10 million in parts and components manufacturing for export and domestic markets as a mandatory step to establish a vehicle assembly facility ($8 million for trucks/commercial vehicles).

Republic Act 9224.1 Million IDEA Institute for Development and Econometric Analysis. Inc.1 Million P2.Regional Trading Agreements ASEAN Free Trade Agreement – Common Effective Preferential Tariff (AFTA-CEPT) • Tariff on goods traded in the region were reduced to a range of 0%. Registration fee that is paid annually and varies depending on type of vehicle. 36 .000 + 20% of value in excess of P600 Thousand P112. ASEAN Industrial Cooperation (AICO) • This was created to encourage companies located in ASEAN to cooperate with each other in sourcing inputs and components.1 Million to P2. c.1 Million of P1. Engine Displacement (in cc.) Gasoline Diesel Up to 1600 1601 to 2000 2001 to 2700 2701 or over Up to 1800 1801 to 2300 2301 to 3000 3001 to over Tax Rate 15% 35% 50% 100% New Taxation Scheme a. Old taxation scheme a. Price-based. Vehicles with a seating capacity of 10 regardless of the engine size are classified as AUVs and exempt from excise taxes. The new tax law benefits the passenger car segment. Approved projects immediately enjoy AFTA-style preferential tariff rates of zero to 5% on imported materials. Tax Rates based on RA 9224 Net manufacturer's price/ importers' selling price Up to P600 Thousand Over P600 Thousand to P1. Engine based tax system b.000 + 40% of value in excess Over P1.5% to pave the way for the duty-free movement of goods in the ASEAN by 2010. b. fuel type and seating capacity. or the Auto Excise Tax law. since it increased their selling price.1 Million P512. Taxation The country’s auto industry experienced significant changes as a new taxation scheme came into implementation in late October 2003. the luxury car segment and compacted SUVs.000 + 60% of value excess of Over P2. shifted the engine size-based scheme into a value-based tax system. rather than engine size-based. and to a certain extent. d. Excise tax on passenger cars and commercial vehicles for the transport of persons dependent on engine displacement and seating capacity based on manufacture or importer’s selling price. c.1 Million Rate 2% P12. Commercial Vehicles: segment most adversely affected.

CVs 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 62% 78% 38% 22% CVs Jan-Jul 2003 Jan-Jul 2004 PCs Source: IDEA. IDEA Institute for Development and Econometric Analysis. and CAMPI However. Inc. the sales of passenger cars cannot offset the decline in sales of CVs.Illustration: The effect of new taxes as RA 9224 lowers prices for passenger cars Passenger Car Sales vs. Inc. Commercial Vehicle Sales 45000 Passenger Car 40000 CV 35000 30000 25000 20000 15000 10000 5000 0 Jan-Jul 2003 Jan-Jul 2004 Market shares of PVs vs. 37 . given the latter’s huge market.

as well as smuggled ones. Power of sellers: Medium . the imports of cheaper car parts and components.Porter’s Model: Industry Rating Barriers to entry/exit: High .The competitive environment has left seller with razor thin margins. both by the dominating Japanese automakers as well as other international car firms. The fluctuation of the peso has also continuously pressured sellers. which has also been further exacerbated by the unabated smuggling of vehicles.The industry is highly capital-intensive. and it finds itself connected with various sectors of the economy. has addressed some of these problems to allow sellers to perform better in the market. Industry authorities have recognized that the automobile industry is indeed characterized by cut-throat competition as new models are being launched in the market. major industry players already have cornered their respective shares in the market. since they import car parts and accessories. depending on their preferences. Inc. which is further intensified by the different marketing promotions. As the economy grows. and consumers usually have their favorite car brands when it comes to performance. as well as the attractive financing packages offered to consumers. Power of buyers: High . such as those in Subic. More over. Over the years. SWOT Analysis Strengths: The automobile industry is strongly linked with a country’s industrialization. There are also the cheaper vehicle imports in the country. demand for motor vehicles is also expected to be sustained in the long-term. Availability of substitutes: Medium – High . features and affordability.There are many brands for a single segment that is available in the market.The Filipino buyer has a lot of options. More over. strategies and events employed by firms. The taxation scheme introduced in the latter part of 2003 also gave way to the launching of newer models and model upgrades and giving consumers a wider range of products to choose from. remain a pressing problem in the industry as they continue to eat a significant portion of domestic demand. which makes entry difficult. from its production processes to the end-users of vehicles. the existence of Executive Order 156. as well as the increase IDEA Institute for Development and Econometric Analysis. meeting capital requirements have become easier as firms form partnerships with other – usually foreign – auto makers. To push their sales. Intensity of Rivalry: High . This growth will also be likely spurred by the growth in the economies of the country’s trading partners. firms have come up with different strategies to entice the buyers. or the restructuring of the Motor Vehicle Development Plan. 38 . Nevertheless.Competition is very aggressive in the industry.

Earnings Before Taxes-Total Assets Ratio. which makes it highly sensitive to the fluctuation of the peso. Likewise. or the restructuring of the MVDP. the motorcycle segment’s rapid growth in the face of the booming consumer demand for its products will serve as a significant driver to the overall growth of the economy. on the other hand. as firms in the country import SKD or CKD kits from other countries. the less likely a company would default.000 units by 2007. is viewed as a silver lining for the country’s firms as it pursues for the tightening of the importation of used vehicles in the country. heavy street traffic and increasing purchasing/ maintenance costs of other means of transportation.012 (Working Capital/ Total Assets) + 0.014(Retained Earnings/ Total Assets) + 0. now being propelled by fashion-conscious individuals and teenagers who prefer the convenience and “trendiness” of motorcycles. Aside from meeting domestic demand. some players are already laying out their plans of expansion to be able to export into neighboring countries. Threats: Smuggling remains to be one of the major hindrances to the growth of the industry. The replacement market. It earned the distinction of being a robust specification that it is still being used today as initial assessment on the financial health of a company. he domestic car industry would probably meet its target sales of 200. The replacement market. is also expected to see a higher growth path. The higher the Z-score. Weaknesses: The country’s automobile industry is highly dependent on imports of (the larger) car parts and accessories.033 (EBIT/ Total Assets) + 0. Local demand. Raw materials are insufficient in the market. More so.006 (Stockholder’s Equity/ Total Liabilities) + 0. the curbing of the illegal activity still remain a far-off dream as the industry still suffers from excessive importation.999 (Sales/ Total Assets) IDEA Institute for Development and Econometric Analysis. as evidenced by the large discrepancy between industry sales and new vehicle registrations. Inc. Altman-Z score Altman’s Z-score is a measure of financial health that was originally developed in 1968 to ascertain if a certain listed US manufacturing firm will face immediate failure. that will allow Filipinos further spending on items such as vehicles. 39 . the industry remains at the assembly stage. Z score = 0. Opportunities: The passing of Executive Order 156.in OFW remittances. The components of the Altman Z-score equation are: Working Capital-Retained Earnings Ratio. Retained Earnings-Total Assets Ratio. However. might also be affected by the rising oil prices. Stockholders Liability-Total Assets Ratio and the Sales-Total Assets Ratio. Variants that were deemed appropriate for private firms and those not involved in manufacturing were developed. unpack them and then begin with the assembly processes. Industry insiders say that should the government successfully curb smuggling. Not only does it prohibit the importation of used vehicles (with exception). will likely grow as the number of renewed motor vehicle grows. on the other hand. but also provides for a development program for the entire motor vehicle industry.

3567788 4.065254 0.3789394 0.761260226 0.0001018 0 0 0.99E-05 0.1793139 0.2201134 3.341305 0.720839 KYOEI KOGYO PHILIPPINES CORPORATION 17.01476983 2.9604376 TOYOTA MOTOR PHILIPPINES CORPORATION 1.7796631 -0.0016222 0.4077438 9.0428099 0.3464261 0.2071447 1.7502752 1.265956 -0.008753 0.486925 5.2165502 0.4956462 2.199251 4.171449 -0.277283 0.8374325 1.2509196 0.8404302 1.1657697 0 0 0.4273605 1.369019077 0.3597709 0.1801549 0.2806663 0.9229873 0.2104004 0 0 0 0.049825 0.6640231 0.048542 0.4234152 9.027113 EMICOR INCORPORATED 4.0807512 -0.0648925 2.805948 FORD GROUP PHILIPPINES INCORPORATED 1.0062098 0 0.035997 -0.6967046 2.7588261 1.8095193 OGAMI CORPORATION -0.3397334 1.4484251 -0.4746416 MEGASTAMP INDUSTRIES CORPORATION 4.791174 MIMINA MOTORS INCORPORATED -10.4488359 3.500311894 1.2725209 1.0871459 3.0722035 -0.541026 0.442368 4.96537562 0.5771218 PHILIPPINE NAKAMURA CORPORATION 0.0390132 1.1138864 0.869991228 2.7471531 0.0462853 10.07542 -0.4916517 1.0031055 0 0 0 4.3538191 Manufacture of parts and accessories for motor vehicles and their engines BAKERSON MARKETING CORPORATION -0.8043404 4.7170893 0.0500677 0 0 0.174501981 0.0503357 0.1032502 2.204272847 1.082038 2.541844 1.358330737 0.2115385 1.7387655 1.6792844 2.061891 0.5387835 2.15051866 1.4800953 ALMAZORA MOTORS CORPORATION 4.16495802 -0.198599 -0.034381 NORKIS AUTOMOTIVE RESOURCES CORPORATION -7.301017 0.369328 SHOSHIBA FILIPINA INDUSTRIA INCORPORATED 1.433045 MITSUBISHI MOTORS PHILIPPINES CORPORATION 0.0239383 -0.036814 -0.0130433 0 0 1.9386799 0.1186375 HOKEI SUBIC CORPORATION 3.6741512 ROBERTS AUTOMOTIVE AND INDUSTRIAL PARTS MANUFACTURING CORPORATION -1.3980714 4.7338225 0.0036288 0.9432569 1.7076654 DEMO POWER PHILIPPINES INCORPORATED 1.1172981 9.3649952 1.1052016 10.1170697 AUTOLIV QB INCORPORATED -1.5331302 1.4057051 1.1760649 IDEA Institute for Development and Econometric Analysis.9356367 0.4182379 1.3765745 0.914565166 0.7787137 1.030825 0 0 0 0.743E-05 0 0 0.1718183 0 0.9808113 0.0243549 BIG OS TIRE CORPORATION -7.391094 0.0313094 0 -0.060445491 0.816498357 -0.0026988 0.0336369 0.959E-06 0 0.4450743 0.06052292 1.083946 -0.02505579 0.44599 0.7487521 0.24697 -0.330533 0.05339217 0.228439 PHILIPPINE NAGANO SEIKO INCORPORATED 1.276017836 0.20499572 -0.1225176 0.033914 -0.0139794 -0.072603947 1.0251244 0 0.4268089 MORIROKU PHILIPPINES INC -1.2325634 1.1631256 0.8278371 4.570450906 0.0707595 FAR EAST INDUSTRIAL SUPPLY AND COMPANY INCORPORATED 2.8249322 1.3937045 4.978606 2. 40 .1359705 0.312156 -0.3273078 -0.01468743 148.051968 0.04105628 2.6071865 RE/ TASSETS EBIT/ TASSETS SE/ TLIABLITIES SALES/ T.3453487 0.5048424 5.57737 JAGUAR PHILIPPINES INCORPORATED -0.3126935 AUTOLIV IZUMI PHILIPPINES INCORPORATED 0.0290421 0 0.7985201 METALMAN STEEL FORMING CORPORATION 0 MEGAPOLITAN MARKETING INCORPORATED 1.430385638 0.3830884 1.7049917 2.9778933 2.168258 JECO AUTOPARTS PHILIPPINES INCORPORATED 0.368575274 0.1472713 0.315293807 0.14739 MILLENNIUM CARS MINDANAO INCORPORATED -11.010331 0.0018811 2.ASSETS 2003 ALTMANZ -1.424169801 1.0026284 0.969215757 1.7898185 LINE SEIKI PHILIPPINES INCORPORATED 3.558446 JAGUAR CARS INCORPORATED 0.934747 0.069364 0.0050226 0.6441199 Manufacture of bodies (coachwork) for motor vehicles METALS ENGINEERING RESOURCES CORPORATION 4.3860973 1.9054762 3.7897646 3.6318686 1.148276 0.0480277 0.2725689 0.96355 JABEZ MOTOR CORPORATION 0 GUNMA GOHKIN PHILIPPINES CORPORATION 0.9250863 1.8351731 1.744868 STA ROSA MOTOR WORKS INCORPORATED 2.5267291 HKT PHILIPPINES INCORPORATED 5.0753237 1.12341252 5.6922925 ISUZU PHILIPPINES CORPORATION -0.254842555 0.092877984 -0.0518533 0.587706147 0.8482 NIDEC PRECISION PHILIPPINES CORPORATION 9.666111488 0.409544328 -0.9262452 2.236561239 -0.0117117 0.002557 0 0.3878149 4.3922893 1.680168 MEINAN PHILIPPINES INCORPORATED 1.47208 4.115351844 1.6310671 HYUNDAI ASIA RESOURCES INCORPORATED 34.8863778 1.361926933 0.1871733 -0.0041556 0.6936502 2.29348 PHILIPPINE HKR INCORPORATED -6.0177336 0.8329893 1.1679404 1.7293074 REMCOR INDUSTRIAL AND MANUFACTURING CORPORATION 0 S C KYMCO PILIPINAS INCORPORATED 6.0120651 0.0191194 0.331808669 0.614558 HONDA CARS PHILIPPINES INCORPORATED 0.ALTMAN-Z SCORES TOP INDUSTRY PLAYERS WORCAP/ RE Manufacture of Motor Vehicles FUCHS LUBRICANTS PHILIPPINES INCORPORATED 0.2791971 COMMERCIAL MOTORS CORPORATION -0.823075493 0.533489 1.4126 KEIHIN PHILIPPINES CORP 1.752594 0 8.0215871 0.0405731 0. Inc.146447606 -0.1312689 1.6509535 PHILIPPINES MANSHO INCORPORATED -0.8758004 1.9479725 JIANSHE MOTORCYCLE INDUSTRIAL PHILIPPINES CORP -20.9635176 2.6802866 0.940063377 0.8133616 4.360201511 8.1792597 -0.809594 PHILIPPINE PRECISION TECHNOLOGY INC 2.1333333 FORMTECH INCORPORATED 1.4342236 3.0246995 0.187818 0 0.084976954 2.04612 10.782740741 -0.0011803 0.

23986 0 0.4749708 0 10.5608416 1.2084157 0.7022167 0.3896011 0 0.6353028 NORKIS INDUSTRIAL AND ENGINEERING INCORPORATED 30.3350446 0.0673717 0.0147461 0.9052125 1.4657514 3.4095539 0.0682372 1.2987997 0.3672448 0.4186224 0.139790908 1.96061112 0.0004846 0.245186 0.5225012 1.04063 0.829173 0.4137028 3.3003001 2.8892386 66.564923 -0.344741 -0.9856564 0.1181665 0.1349324 0.018281 0.8953412 1.1577684 -0.5426291 1.843886326 2.0649845 0.5806571 1.5631264 0.6096082 1.1089709 1.240002574 0.3431712 0.2740126 1.1906144 1.0239706 0. and CIBI.4146131 0.282892 2.7143 0 0.116781478 1.0008919 0.5173267 -6. 41 .042757 0.3375089 1.6995769 1.7224243 1.572427186 6.0052789 0.0015416 0.004463 0.6090112 1.7237686 -0.0900589 0.6863777 1.002508 0.0007781 0.0002673 0.8344 -1.4286622 1.7211034 1.486461909 0.048894 -0.7028182 0.626523 1.7279369 -245.64735752 0.7895959 0.0267466 0 0. Inc.917155 1.3469166 0 0.784882172 0.363582094 1.270385676 1.067597039 0.036932193 1.4190135 2.1531693 2.447615 2.0048938 0 0.4241142 -1.DAIWA SEIKO PHILIPPINES CORPORATION TS TECH TRIM PHILIPPINES INCORPORATED TECHNOL EIGHT PHILIPPINES CORPORATION TAKANICHI PHILIPPINES CORPORATION PHILIPPINE TECHNO TAKATSUKI INCORPORATED KEIHIN AUTO PARTS PHILIPPINES CORPORATION ZPI PHILIPPINES INC ADVAN MOTOR INCORPORATED MITSUBA MANUFACTURING PHILIPPINES CORPORATION FCC PHILIPPINES CORPORATION HONDA PARTS MANUFACTURING CORPORATION PHILIPPINE ALUMINUM WHEELS INCORPORATED IMASEN PHILIPPINE MANUFACTURING CORPORATION TS TECH PHILIPPINES INCORPORATED LAGUNA AUTO PARTS MANUFACTURING CORPORATION BRIGGS AND STRATTON INTERNATIONAL EAST ASIA INC MITSUBISHI CORPORATION TRP INCORPORATED FURUKAWA ELECTRIC AUTOPARTS PHILIPPINES INCORPORATED MITSUBA PHILIPPINES CORPORATION ISUZU AUTOPARTS MANUFACTURING CORPORATION TOYOTA AUTOPARTS PHILIPPINES INC ASIAN TRANSMISSION CORPORATION TAKATA PHILIPPINES CORPORATION JIDECO MANUFACTURING PHILIPPINES INC FORD MOTOR COMPANY PHILIPPINES INCORPORATED TEMIC AUTOMOTIVE PHILIPPINES INCORPORATED Manufacture and assembly of motorcycles MASUDA PHILIPPINES INCORPORATED SUZUKI PHILIPPINES INCORPORATED NORKIS TRADING COMPANY INC KAWASAKI MOTORS PHILIPPINES CORPORATION Manufacture of motorcycle engines and parts thereof JIANSHE PHILIPPINES INCORPORATED PORTA COELI INDUSTRIAL COMPANY INCORPORATED HONDA PHILIPPINES INC 0.1340533 6.2153293 0.1525628 2.274089 0.0611618 0.210049 -0.3932643 1.6462037 1.156542098 0.5142991 1.2226903 0.9858162 -1.4659431 1.513455117 12.9992336 1.2071648 -0.3671666 1.0012507 0.111152 1.3409797 0.020945 0.2761414 1.659010547 5.5029679 1.607050551 3.078545 0.573431075 5.0168395 0 0.066922503 0.374744 2.2136241 0.0021138 0 0.538793463 8.1024555 1.288942 1.9453376 0.725E-05 0 0.012887 0.321773785 0.3559877 2. IDEA Institute for Development and Econometric Analysis.4714532 0.4935093 1.304E-06 0.001062 -0.351614 1.036559507 1. Inc.1356593 -0.4448014 3.0063807 0.256939256 0.11551389 1.433343644 7.127072969 0.5752881 2.580195 1.6605138 1.2356759 4.0233404 0.3756542 0.6647575 3.651189 0 33.006011 3.0016215 0 0.1848209 0.0102274 0.0002362 0.0063128 0 0 0.5592 1.544581 -0.6156926 1.7225544 1.65343323 3.70577 5382.0169546 0 0. Inc.356432432 0.1531922 0.255223584 0.389720796 0.7621915 Source: IDEA.5405721 1.816969667 2.3343709 0.626932866 1.2776813 0 0.275487 1.8564791 0.164417742 4.5625755 0.908389 0.5345407 1.8243112 2.6485995 1.060138263 2.1411438 1.1804638 1.7972422 -0.3227669 1.5646011 0.2242955 4.6251094 1.005435 0.1588763 1.2398346 0.