Ernesto V. Tan, financial adviser of Auto Prominence, said the German firm promised back in 1996 that it would assemble Audi vehicles in the country after the brand had been introduced and established in the Philippine market.
Based on that assurance, Tan said the Rodriguez brothers of Auto Prominence invested roughly P4.5 billion to put up an assembly facility in Alaminos, Pangasinan, a showroom in Pasong Tamo and paid for the requisite license fees for a slot in the government’s Motor Vehicle Development Program.
In line with this, Auto Prominence signed three separate contracts with Audi AG in 1996, Tan said.
The first contract was called ALTAPS or assembly license, technical assistance and parts supply agreement. The second covered a distributorship agreement that was renewable yearly, with the latest contract signed in June 2003 and was supposed to cover a five-year period ending in 2008.
However in September 2004, Tan said Audi AG unilaterally terminated the distributorship contract with Auto Prominence and awarded it to another car dealer.
The third contract involved a license fee agreement for Audi AG to transfer technical knowledge, knowhow and designs to Auto Prominence which paid P50 million from 1996 to 2001 for the transfers.
According to Tan, Audi reneged on the technical transfers, bolstering Auto Prominence’s fear that Audi, right from the very start, had no intention to manufacture its vehicles in the country.
Audi also cut off Auto Prominence’s connection with Audi’s Geko computerized diagnostic system, crippling Auto Prominence’s ability to adequately service Audi vehicles. Nonetheless, Tan sought to assure their customers that they are still able to continue servicing Audi vehicles.
Audi merely wanted to gain entry into the Philippine market without any investment and used Auto Prominence to sell its vehicles in the Philippines, Tan said, adding that the company never even registered with the Securities and Exchange Commission (SEC) and had no authorized agent in the country.
Auto Prominence, Tan said, had repeatedly asked in vain about Audi’s assembly plans. Meanwhile, the company’s 26.7-hectare plant in Alaminos, Pangasinan continued to deteriorate, he added.
What’s more, Auto Prominence now stands to pay the government around P100 million for the preferred three-percent tariff it had been entitled to when it was able to register itself as a participant in the MVDP, Tan said.
Auto Prominence is suing Audi AG for estafa and falsification of public documents and is seeking damages amounting to about 50 million euros or P3 billion.
Tan said Auto Prominence is still hoping to patch things up with Audi somehow and on its own is extending warranties and assuring service for the Audi vehicles it has sold and continues to sell. Auto Prominence, Tan said, still sells Audi vehicles which it now sources from other Audi dealers in the Middle East and elsewhere.