Over the weekend, Honda Cars Philippines Inc. (HCPI) suddenly announced that it would be closing its Sta. Rosa assembly plant in Laguna which produces the BR-V and City.The news came as a shock to most in the industry as it is one of the few remaining local manufacturers.
But here's a bit of irony: it seems the Department of Trade and Industry, upon the prodding of the Philippine Metalworkers Association (PMA), was already looking at a means to safeguard domestic vehicle assembly and manufacturing.
“We really have to study the need to impose safeguard duty and other measures to provide at least a level of support to the local assemblers. Vehicle imports have been growing, causing injury to local industry, from assembly to the local parts supply network in the country,” said, DTI Secretary Ramon Lopez.
Currently, there is no tariff protection that is favorable to locally-made vehicles. As such, importing a brand new vehicle is generally more cost-effective for car companies rather than operating a plant and assembling the vehicle in the Philippines. The effect of increased complete built up (CBU) vehicle importation is hurting local car assembly, auto parts manufacturers and even in the employment section.
Of the 400+ thousand vehicles sold in 2019, only about 100,000 units are assembled in the Philippines. That means for every 4 vehicles sold, 3 of those are imported. Carmakers opt to get units from their production sites in Thailand or Indonesia because, by comparison, a vehicle built in the Philippines costs about USD 1,500 more (about PhP 75,000) than an imported one.
According to Lopez, the DTI will be meeting with HCPI in order to consider any alternative options in order to “minimize the impact of any final decision they will make”. Despite the planned closure next month, Honda says that automobile sales and after-sales operations will continue on. The automaker will soon have to revert to sourcing units from Thailand – their major ASEAN production hub.
You may read the full petition here.