5 more years! President Marcos to extend ₱27B CARS Program to support local car manufacturing-PSAC

Local automakers got a big shot in the arm after the Philippine government extended the timeframe of its ₱27-billion program to boost domestic car manufacturing.

The Private Sector Advisory Council (PSAC) announced in a May 2023 press statement that President Ferdinand Marcos Jr. has approved a five-year extension to the Comprehensive Automotive Resurgence Strategy (CARS) Program.

PSAC is composed of business leaders and experts across six main sectoral groups: Agriculture, Digital Infrastructure, Jobs, Healthcare, Build-Build-Build and Tourism. 

Marcos set up the council to synergize efforts between the public and private sectors. It had recommended the extension to the President.

“CARS has demonstrated its effectiveness and value as a high-end manufacturing operation which has greatly helped in the creation of jobs, transfer technology, and boost global competitiveness by supporting domestic auto manufacturing and stimulating investment,” PSAC said.

“The extension of CARS for 5 years will continue to provide incentives and support for manufacturers that meet specific requirements in terms of investment, production, and technology development,” the council added.

₱27B for Philippine carmakers

The CARS Program was established under Executive Order 182 of the late former President Benigno Aquino III.

It aims to revitalize the local car industry by providing ₱9 billion in government subsidies over six years to each qualified manufacturer, which must produce at least 200,000 units each in that period, The majority of parts must also be produced locally, with all units for domestic sale.

Mitsubishi Motors Philippines Corporation (MMPC), which is the country’s second-largest local car manufacturer in terms of sales, builds the Mirage hatchback and Mirage G4 sedan at its Sta. Rosa, Laguna plant under the scheme.

Leading carmaker Toyota Motor Philippines (TMP) is also part of the program with the popular Toyota Vios subcompact sedan.

However, the car industry pushed to extend the program, which ended in 2022, in light of production delays caused by the COVID-19 pandemic that started in 2020. In addition, it cited reduced demand for cars because of higher excise taxes under the government’s tax-reform law.

The Department of Trade and Industry said as of December 2022, Toyota has only produced 134,242 Vios units, while Mitsubishi has built 72,923 Mirage units.

New models in the pipeline?

TMP lauded the extension, saying that it would draw in more investors for Philippine automotive manufacturing.

“CARS Program is a significant government support as it helps the industry, among others, maintain and promote employment not only to the manufacturers but also parts suppliers and other allied industries,” said TMP first vice president Rommel Gutierrez in a report by the Philippine Daily Inquirer.

Toyota has been producing the previous-generation XP150 Vios locally under the scheme. It is not yet clear if it will transition production to the Daihatsu-based AC100 Vios, which is now on sale in other ASEAN markets.

Meanwhile, MMPC told AutoFun Philippines that the government has yet to reach out to the carmaker regarding the CARS Program extension. Marcos had met with Mitsubishi Motors Corporation president and CEO Takao Kato on an official trip to Japan on February 2023.

However, Mitsubishi is eyeing a new assembly line at its Sta. Rosa plant, depending on the incentives provided by the CARS Program.

Kato said some of the models being considered are the Xpander and Xpander Cross multi-purpose vehicles, which are currently imported as completely built units from Indonesia. These are among the best-selling vehicles in their class, accounting for 16,309 sales for both cars in 2022.

Do you think Toyota and Mitsubishi can each hit their 200,000-unit target in the next five years?

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