Toyota Parts for Japanese Cars assembled in Philippines
Michinobu Sugata, president, Toyota Motor Philippines Corp. (TMP) announced recently that the company would double the local auto parts content of its vehicles that were assembled locally by 2012, by sourcing more parts in the Philippines itself. Sugata said that TMP has plans to raise the local content for its locally assembled best selling models Innova and Vios from the current 20 to 25% to around 40 %.
Toyota Motor Philippines has urged the government to introduce measures to attract Japanese auto parts makers who have plans for diversifying their production business beyond Japan to set up operations in the Philippines.
Sugata pointed out that Japanese manufacturers are aware of the high potential of the Philippines, adding that there was an excellent investment opportunity because of the Japanese yen’s appreciation. He said now was the best time to invite the Japanese auto parts manufacturers to the Philippines because besides the robust yen and the recent disasters in Japan that are compelling them to review their current supply chain, there were also other factors in favor of the country. For instance, the Philippines has a strong BPO industry and robust OFW remittances that play an important role in maintaining a stable business environment.
Popularity of Japanese Cars in Philippines
Sugata said that with leading two-wheeler manufacturers like Honda and Suzuki making huge investments for expanding the local assembly of their motorcycles, the motorization of the Philippines was gathering speed. He added that after the two wheel makers, the four wheel manufacturers would follow.
The Toyota Group is made up of around 20 automotive parts makers that supply parts to various production bases across the world. The Philippines arm of the Toyota Group annually exports components and parts worth around $860 million to its global chain.
The Toyota Group has been urging the Philippines government to work out a special program for auto parts exports. The parts complementation scheme of the Group offers market opportunities to local parts manufacturers that would otherwise find it hard to penetrate the export market on their own.
The recent disaster in Japan adversely affected TMP’s supply chain for key components, compelling the company to slash production days and change the work shifts at its Santa Rosa plant.
Toyota Auto Parts Inc. (TAP) located at Santa Rosa is the international production and supply hub for manual transmissions within the company’s innovative international multipurpose vehicle project (IMV). TAP produces transmissions and constant velocity joints mostly for the export market, for countries such as Thailand and Indonesia. TAP was established in 1990, with 95 % being owned by Toyota Motor Co., and 5 % by TMP.
According to Sugata, the increasing competition with respect to cost between different parts suppliers in the surrounding region threatens the Philippines’ position as an auto parts production base, and there was a high risk of losing business to robust production bases like Indonesia and Thailand. He also cautioned the government that the Philippines could lose a considerable part of automotive export sales if the government did not support parts manufacturing.
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