Toyota Motor Philippines (TMP) said it would double the local content in its best selling Vios model to 40% in 2014 with over 300 locally sourced parts while substantially improving utilisation of its press shop.
TMP president Michinobu Sugata made the announcement at a Job One ceremony for the redesigned Vios at the automaker’s plant in Santa Rosa, Laguna. The Manila Bulletin said the Philippines was the second ASEAN country to introduce the new Vios after Thailand last March.
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Sugata noted local workers’ collaboration with Motomachi plant engineers in Japan to develop the left hand drive Vios for the Philippines (Thailand is RHD) and said TMP would boost localisation of the third generation Vios by pressing 15 body parts in the plant by July 2014. The Vios now has 265 local parts versus 230 when local CKD assembly began in 2007.
“This will bring improved press technology into the country and allow us to realise our vision of invigorating Philippine manufacturing which is very important in terms of its great potential for investments, employment and technology,” Sugata told the Manila Bulletin.
The paper said the local parts plan would be welcome because market leader Toyota is now selling more models imported completely built up (CBU) than shipped in completely knocked down for local assembly. CBU sales account for 60% of Toyota’s sales with only two of the 18 models sold in the Philipppines assembled there – the Innova is the other model.
The parts localisation programme was aided by income tax incentives approved by the government approved by the Board of Investments in July 2012. TMP has since spent P1.757bn to assemble the new Vios locally.
TMP vice-president Rommel Gutierrez told the Manila Bulletin on the sidelines of the event it was looking at localizing “bulky parts” to boost local added value to 40% from the 20% currently.
This would reduce shipping costs on parts currently imported from Thailand and Indonesia and also improve capacity utilisation of TMP’s press shop which is currently at a low of 30%. Gutierrez, however, declined to say how much the localisation would improve press utilisation or specify the “bulky parts”.
Reducing pack size is an ongoing challenge for automakers’ CKD kit packing units and importer/assemblers as shipping costs are based on weight and bulk and have to be factored into the final cost of completed cars.
In a speech, Sugata said TMP would also increase capacity from 30,500 units to 33,300 a year.
With the new model expected to boost sales, Sugata added, TMP plans actually to build 36,300 Vios and Innova units by the end of this year, up 18% versus 2012, using overtime and holiday time.
TMP will thus build 14,594 units of the new Vios in the second half.
“We will take the market by storm with this model,” he claimed. “We have already jump started ‘motorisation’ of the Philippines. With the new Vios, which is proudly made by Filipinos for Filipinos, we will make the auto industry fire on all cylinders. You can bet on it,” Sugata added.
Gutierrez said TMP may have to expand its factory if capacity explands to 40,000.
Despite a price rise, TMP expects Vios sales to reach 2,000 units a month from 1,400 now.
The model line accounts for 60% of its CKD model sales, the Innova, a ‘utility vehicle designed especially for Asia, 40%.
TMP expects overall sales – both CKD and CBU imports – to reach at least 70,000 units this year, up from over 50,000 in 2012.
TMP vice-chairman Alfred Ty expects new sales records for the Vios which started in 2003 with under 500 units a month, rising to 1,000 in 2007, and 1,700 last March.
Ty said TMP had sold 816,396 vehicles in the last 25 years.
