Chinese-made vehicles to stimulate local auto industry

The entry of Chinese-made vehicles into the country will stimulate the local automotive industry, much the same way that the entry of imported motorcycles stimulated the local motorcycle industry, according to local auto parts makers.

Local auto parts makers said that the "China effect" opened wide the local market for motorcycles, widening the client base and bringing down the prices of motorcycles, making them more affordable.

Imported motorcycles first came into the country in the late 1990s.

Most Filipinos who could not afford a motorcycle suddenly found out that they could now buy a motorcycle for a down payment of as little as P3,000 and a monthly installment of P1,000 through in-house financing.

With rising demand for motorcycles, the industry is now experiencing an annual growth rate of 30 percent to 40 percent.

Now, there are more people riding motorcycles to and from work, spurring the development of an after-sales market for parts and accessories.

Chinese-made motorcycles are the entry-level bikes.

Those ready to move to better and  higher quality motorcycles now patronize the relatively more expensive Japanese brands. This shift has increased the demand for Japanese brands, prompting local Japanese manufacturers to develop low-priced motorcycles.

It has also provided local manufacturers and their parts manufacturers with the economies of scale that they need, enabling them to expand their operations, lower their prices and even invite foreign investors.

The Motor Vehicle Parts Manufacturers Association of the Phils. (MVPMAP), the organization of local auto parts manufacturers, is optimistic that this same phenomenon could happen in the local automotive  industry with the implementation of a Philippine Utility Vehicle (PhUV) Program.

MVPMAP president Eddie Jose expressed optimism that  the PhUV program would  give local car assemblers and parts manufacturers the much-needed critical mass of new automobile users that would result in economies of scale and consequently, lower vehicle prices.

Realizing that retail financing is a key factor in the success of the  PhUV program as it was in the motorcycle industry, Jose said the  MVPMAP is now talking to government financial institutions to provide retail financing to make PhUVs affordable to a broader spectrum of the potential client base, increase the demand and effectively jump start the program.