YEARS AGO, the government decided to help the booming auto industry in the country by creating a so-called car manufacturing incentive program that gave financial support, and tax incentives to car companies that manufacture automobiles here in the Philippines. They called it the CARS or Comprehensive Automotive Resurgence Strategy.
It was created at the time when the Philippine automotive industry was experiencing a car sales boom that began in 2010, right after the global financial crisis that exploded in 2007.
To think that the then government was imagining that it can help an already rising industry by crafting a strategy that gave benefits only one or two companies can fulfill is quite the dream.
In a gist, CARS wanted to give benefits and money to car companies that can produce 200,000 units of vehicles assembled/produced locally on their own.
At that time, the country was only selling about 350,000 units of cars, industry-wide or all of the car companies combined. The biggest question then was, how can one car company assemble 200,000 units of vehicles and then sell them all off locally to a market of 350,000?
The government’s answer was that the industry should grow eventually in the future. Sure it did, to a height of about 450,000 in five years.
Of course, companies like Toyota, which had over 45% of the market dared to join CARS, because half of the motor vehicles sold in the country were theirs. Still, they were complaining that the 200,000 quota of the government was an overreach.
Even Mitsubishi dared but they could not get to even a portion of the requirement. What this simple thinker believes is that the 200,000 units per manufacturer should be adjusted to something like 350,000 for all local players who want to join the program.
Why? 350,000 is the true mean average of car sales in the country since 2010, yes, including the pandemic years.
With this strategy, we are now urging the auto industry to sell more locally-made products instead of importing cars. This not only makes it better for the auto industry, but it also makes the cars cheaper for the local market.
In the future, when production overtakes the demand, which it will at some point, we can then become a car exporting country.
But first, we have to satisfy our local market with supply and quality. This is how Thailand did this and how they became the car export (especially pick ups) central of Southeast Asia.
It is not late yet. Our auto industry is on the rise again after the pandemic.
What the naysayers predicted, that people will be poor after the lockdown, was wrong. Studies from Ivy League universities show that because of the lockdown, people kept working but spent less and now have more money than they did before but in savings. We will discuss that in another issue.
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