Vietnam auto industry poised to overtake RP

MANILA, Philippines - The Vietnam auto industry is poised to overtake the Philippine auto industry sooner rather than later, a regional Toyota executive said.

During his presentation at the Second Philippine Automotive Manufacturing Summit sponsored by the Philippine Automotive Competitiveness Council Inc (PACCI), Toyota Motor Asia Pacific senior vice president Vince Socco said that the Vietnamese auto industry is very robust.

In terms of sales, 2009 figures show that the Philippines lead auto sales by a very small margin. However, what is alarming is that Vietnam is already out producing the Philippines. This implies that most of the vehicles sold in the Philippines are imported.

“Vietnam out produces the Philippines by 40 percent as of 2009,” Socco said. In fact there are more vehicle assemblers in Vietnam than in the Philippines. In Vietnam there are 15 assemblers but only 11 in the Philippines.

“The Philippines has a lot of catching up to do,” Socco said. “The CMVDP (Comprehensive Motor Vehicle Development Plan) is pointing to the right direction by indentifying what the industry should focus on.”

Socco said that there are two things that the Philippines can do. First is to take advantage of the ASEAN market and second is to make use of the Free Trade Agreements (FTAs) in place because FTAs allow automakers to consider strengthening their production base outside Japan.

At the same conference, University of Asia and the Pacific Economist Bernardo Villegas said that the strong peso is not good for the manufacturing industry because it makes locally produced goods more expensive than imported goods.

“If you make a study the peso is over valued,” Villegas said. He noted that the peso should be 46 to 50 to a dollar. “It’s not good for the economy. Let’s have a realistic exchange rate.”

Another factor that would increase the production of vehicles in the country is a stronger parts base. Toyota Motor Philippines (TMP) and Ford Group Philippines said that there is a need to boost the local parts industry in order to encourage more local vehicle production.

Ford president Randy Krieger said that it is impossible to have an auto industry if the supply of parts is limited. Locally produced Ford vehicles only have 30 percent local component.

President Michinobu Sugata said that their local production of Vios and Inova is dependent on imported parts. He said that only 20 percent of the parts are sourced locally.