Automotive Parts Production Seen Growing 15% Annually

Article excerpt

Local automotive production is projected to grow by 15 percent annually that should correspondingly raise an equivalent increase in domestic parts production, the Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP) said.

MVPMAP President Ferdi Raquelsantos said the projected growth in local assembly completely knocked down (CKD) units is reason enough for the local parts producers to be optimistic about 2013 because this would mean corresponding equivalent increase in parts production.

"It shows that with the coming motorization and ASEAN integration, local auto production from completely knocked-down (CKD) kits will increase by about 15% annually, thus provides an equivalent increase in local auto parts production," said Raquelsantos.

He, however, did not specify clearly the base figure but statistics showed that total motor vehicle industry in 2012 registered total sales of at least 185,000 units of which 156,649 units came from the members of the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI), a 16-member organization composed of assemblers and traders, and 28,400 units from the Association of Vehicle Importers and Distributors Inc. (AVID), a 6-member all car traders' group.

The share of imported completely built up (CBU) packs was expected to account for over 50 percent of total market while the CKD units have fallen below 50 percent, a reversal from what it used several years ago.

Raquelsantos cited that for the last few years, the country's local CKD productions were badly battered from two fronts: the increasing importation of brand-new CBU vehicles and the increasing importation of used vehicles by the so-called informal sector.

According to Raquelsantos, of the new vehicles registered with the Land Transportation Office in 2011 the bulk of 44% were for CBU, an astounding 26% from the informal sector and only 30% from local CKD production. In all the 70% of the total new vehicles, there is no local value added in terms of local parts and labor.

Furthermore, while CBU grew from 94,000 in 2010 to 98,000 units in 2011 and the informal sector increased from 52,000 to 57,000 units, local CKD production dropped from 74,000 to 67,000 units. This has proven detrimental to both our local auto assembly and parts manufacturing industries," he said. …