The dramatically changing global landscape and economic conditions have created the urgent need, and the opportunity, for GM Corp. to reinvent both the car and the company. “All of our key stakeholders — US and global governments, taxpayers, unions, employees, retirees, suppliers, partners and dealers – are playing a vital role in our reinvention,” the company said in a statement.

“Building on the substantial progress we have already made, GM’s United States operations recently made important announcements about the progress of their efforts to become a winning company for the future. The announcements apply only to our US operations, but we want to summarize them and explain what they mean for our business outside of the US,” the company said.

GM Corp. has reached agreements with its main labor union (the United Auto Workers) and the US Treasury that will launch a new leaner, stronger ‘New GM’ positioned for a profitable, self-sustaining and competitive future.

Pending approvals, the New GM is expected to launch in about 60 to 90 days as an independent company with the dual advantages of being built from only GM’s best brands and operations, and being supported by a stronger balance sheet due to a significantly lower debt burden and operating cost structure than before.

The new GM will pursue the viability plan announced by GM Corp. on April 27th, focused on producing winning results by putting the customers first, concentrating on four core brands, Cadillac, Buick, GMC and Chevrolet, and continuing to invest in green, energy-saving technologies.

GM has agreed to sell substantially all of its assets to the New GM, which is a US Treasury-sponsored entity.

“The new GM is expected to launch as an independent company under our current leadership, and the New GM will be the new parent company of our subsidiaries in ASEAN (which includes the Philippines),” the company said.

To implement the sale agreement for the new GM, GM has filed petitions for relief under chapter 11 of the United States Bankruptcy Code. “Because the sale agreement already has the support of the UAW and the US Treasury, we expect that the sale will be approved expeditiously,” it said.

In the US, GM has taken a number of steps to protect current and new GM customers, ensure that its operations will continue without interruption, and provide for a smooth transition to the new GM.

“It is important to know that only GM’s US operations are part of the Chapter 11 process, and that GM’s US court filing should have no direct impact on Asia Pacifc and ASEAN regions which includes the Philippines. Our operations will continue to meet consumer demand,” the company said.

Philippine Star

Tsikot.com Philippines

The local auto industry is asking the government to help local car manufacturers by lowering excise taxes, making permanent investment incentives and buying locally assembled vehicles.

In a press briefing on Thursday, Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) president Elizabeth H. Lee said there is a need to strengthen the completely knocked down (CKD) business because it is where the jobs are.

Lee estimated that the auto industry supports half a million families as it employs 74,000 workers.She said CAMPI has met with the Board of Investments (BOI) last month to discuss ways to help cushion the industry from the effects of the slowdown in consumer demand.

Lee said one of the measures proposed by CAMPI was to at least lower the excise tax imposed by the government. A two percent excise tax is placed on 600,000 units; 12 percent up to 1.2 million units and 20 percent on the excess.

“It is pretty hefty. We are asking if this can be shaved,” Lee said.

However, because the government is getting its money for the economic stimulus fund from taxes, Lee said they have also proposed other measures. She said they have asked the BOI to permanently include the industry in the government’s Investments Priorities Plan (IPP).

The IPP, which is changed annually, lists industries that can qualify for tax breaks. No industry is permanently included in the IPP.

For this year, Lee said they are hoping that they will remain in the IPP to encourage capital infusion.

Likewise, Lee said the government must prioritize buying locally assembled vehicles for their re-fleeting program.

“This is similar to President Arroyo’s buy Pinoy, buy local program, which encouarages local government units to prioritize locally made products over imported ones,” she explained.

Aside from this, Lee appealed to the Bangko Sentral ng Pilpinas (BSP) to amend its rule that requires 20 percent down payment for vehicle purchases. Lee explained that whenever car companies offer a zero downpayment scheme, the firm must shoulder the initial cash outlay.

“Reducing the required down payment will help us. At the same time, maybe they (BSP) can also lower the interest rates,” she added.

Despite the call for help from the government, Lee stressed that the local auto industry is not in a crisis. She said the worse case scenario for the industry is a flat growth. Initial industry projection was at two to four percent growth for this year.

By Ma. Elisa p. Osorio, Philippine Star

Tsikot.com Philippines

Inspite of the global economic slowdown, the local auto industry’s total sales posted a six percent growth in 2008.

Data released by the local industry association, Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI), showed that a total of 124,449 vehicles were sold last year. Sales peaked in December when buyers wheeled out about 10,000 vehicles from car showrooms.

Sales volume would have been higher, experts said, if not for the unusually long holiday break. Selling opportunities were cut short by almost two weeks.

Sales of commercial vehicles accounted for 64.3 % of total industry sales.

“Elsewhere in and around the world, the auto markets of developed countries experienced steep declines due to the credit crunch coupled by deteriorating consumer confidence in those respective markets. Thankfully, there is enough liquidity in the local financing environment with consumers able to take out loans for their personal and business needs,” said CAMPI president Elizabeth Lee.

Slow growth in 2009

The industry will not be as resilient in 2009, however. While sales are expected to be stable, Campi has projected a conservative growth of 2 to 4 percent.

The government’s projection is even dimmer. Board of Investors managing head Elmer Hernandez projected a flat growth at the minimum or a four percent growth at the maximum.

“It will be a challenging year for most, but nevertheless we are still looking forward to growth year for 2009,” said Lee.

Job losses

Hernandez said the government is already preparing a number of measures to cushion the impact of the global financial crisis on the business sector, including the auto industry, in order to prevent job losses and further downsizing.

“We are aware that local companies have already restructured (their) business plans, and probably even (their) labor agreements to ensure the long-term viability of their operations. The BOI is currently studying measures that may be adopted by the government to forestall severe economic repercussions not only on the automotive industry but on the entire business sector as well,” Hernandez said.

Without providing specifics, Hernandez said fiscal and non-fiscal incentives will be provided. He said the management committee of the BOI tackled the matter on Thursday. These will supposedly support the industry’s sales outlook for 2009.

* Campi earlier called on the BOI to help the industry survive the financial crisis. Campi is asking for the following measures:
* assistance in easing doing business in the country
* assistance in ensuring the growth of the local industry through market expansion through the implementation of the ban on importation of used vehicles under Executive Order 156
* stricter implementation of Republic Act 8506 which bans the importation of right-hand drive vehicles
* a commitment from government to purchase locally assemble vehicles for its fleet
* lowering of the general 20 percent down payment
* upgrading of public utility vehicles with newer vehicles
* streamlining of registration requirements

ABS-CBN News

Tsikot.com Philippines

The much-anticipated 2009 Honda City recently rolled off the assembly line at the manufacturing plant of Honda Cars Philippines, Inc. (HCPI) in Sta. Rosa, Laguna.

The third-generation Honda City will be sold in the local market starting on the first quarter of 2009.

“Proud to be Philippine-made, the production of City is a testament to Honda’s long-term confidence in local manufacturing operations,” said HCPI President and General Manager Hiroshi Shimizu during the roll-off ceremony in December 2008. The roll-off ceremony, attended by nearly 700 Honda employees, was the culmination of several months of trial production and fine-tuning of new processes to meet Honda’s stringent standards of quality and efficiency. From engine and body assembly, welding, painting and final quality inspection, each section of the production process has been meticulously refined to create high quality products for the customer’s ultimate satisfaction.

“We are very thrilled with the introduction of the third-generation City. The market can look forward to a new City that will totally change the standards in its class,” HCPI Department Head for Sales Operations Voltaire Gonzales said. “Apart from value for money and reliable qualities the City has been known for, the 2009 model offers dynamic styling and class-leading technologies that are suitable to the demands of modern-day urban living.”

The first-generation Honda City was introduced in 1996 in response to the growing needs for automobiles in Asian markets, considering the economic condition in the region at the time. Today, the City is produced in seven countries, namely: Thailand, Malaysia, India, Pakistan, China, Turkey, and the Philippines.

Besides the City, HCPI’s Laguna plant also produces the best-selling Civic. “Filipinos’ craftsmanship and competitive skills live up to Honda’s global standards to ensure that every Honda product comes with a distinction of world-class quality,” said Mr. Shimizu.

Photo shows Honda executives, led by Hiroshi Shimizu (5th from the left), President and General Manager of Honda Cars Philippines, Inc., leading the roll-off ceremony of the 2009 Honda City in Sta. Rosa, Laguna recently.

Honda Philippines Media Release

Tsikot.com Philippines

Automotive sales went up by 8.3 percent to 114,564 units in the first 11 months of this year from 105.771 units in the same period last year despite a 7.7-percent drop in the November sales performance.

“The Philippine auto industry’s year to date growth rate is a stark contrast to that of the largest auto market — the US where the November auto sales plunged another 35 percent, the lowest in two decades,” Elizabeth H. Lee, Chamber of Automotive Manufacturers of the Philippine (CAMPI) president said.

“The local Philippine auto industry, however, is still cautiously optimistic as it may still reach a yearend sales volume that will show the highest sales in 11 years. With the availability of credit in the market, buyers continue to buy but have become more scrutinizing in the purchase of vehicles. Competition remains stiff,” Lee added.

Lee noted that the auto industry is faring relatively better than its bigger counterparts. Commercial vehicles continue to dominate overall vehicle sales nationwide with a 64-percent market share gaining 6.7-percent growth in sales. Passenger cars on the other hand have 36-percent market share.

Toyota Motor Philippines sold the most vehicles from January to November this year as it captured 36.7 percent of the market. It has sold 41,997 units overall. Mitsubishi Motors Philippines Corp. commanded a 14-percent share with 15,984 units while Honda Cars Philippines Inc. was a close third with 11.8 percent of the market which translates to 13,557 units.

Lee said that for the remainder of the year, buyers can take advantage of the the last quarter sales programs of most automakes while at the same time enjoy the current price levels which have yet to reflect the full impact of the increase in raw materials and logistics cost.

Meanwhile, commercial vehicles (CV) grew 6.7 percent. Month-on-month decrease was posted at 10.3 percent.Such decrease is attributed to delays in the arrival of supplies.

Toyota sold the most CV with 34.4 percent market share or 25,174 units. This was followed by Mitsubishi with 19.8-percent share and 14,468 units. Third was Isuzu Philippines Corp. with 12.5 percent or 9129 units.

For passenger cars (PC), year to date sales grew 11.3 percent compared to the same period last year. Compared to October 2008, the demand for PC went down by 3.1 percent.

By Ma. Elisa P. Osorio, Philippine Star

Tsikot.com Philippines

The local auto industry is expected to grow by a slower rate next year due to the global economic downturn.

“For next year, growth maybe between two and four percent, down from this year’s 10-percent growth,” CAMPI president Elizabeth Lee said.

According to Lee, the local industry is better off than other countries which has been besieged by falling sales as a result of the slowdown in global demand especially in the European and American markets.

“So far auto players remain cautiously optimistic given the local industry’s better performance versus that of other developed markets,” Lee said.

She said the problems of car companies overseas have an effect on the Philippines but it is not enough to cause a contraction of the industry. “We remain positive until next year,” Lee said. “This year we are still gunning for 125,000 units,” she added.

She said the industry is on track to meet this year’s sales target. “The local market is still growing when compared to others that has been declining since the first quarter.”

Latest data showed that auto sales for the first 10 months of the year went up by 10 percent as local automakers predicted they will be posting the highest yearend sales in a decade.

Data showed that total vehicle sales from January to October was at 104,757 units. Bigger when compared to the 95,242 units sold during the same period the previous year.

However, month-on-month comparison showed a decline of 2.9 percent in sales.

“Although the effect of the global crisis on the local auto industry is relatively minimal at this point in time, players are preparing for measures to guard against the devastating effect the crisis has had on other larger, mature, foreign auto markets,” Lee said.

Lee pointed out that developed countries like the United States and Europe will suffer as a direct result of the global economic slowdown.

”One of the possible ‘side effect’ of some OFWs coming back home  is that they will be ‘forced’ to become dual income earners in the short to mid-term. Most may choose to become entrepreneurs against the backdrop of declining job opportunities as a result of the crisis. Bad times could somehow create some good opportunities for entrepreneurs. They must be supported as they are a significant engine for growth,” she noted.

“Aggressive inventory management to maintain optimum cash flow will be priorities for local operations.  At the same time, a market offensive stance to help mitigate the dire effects of the global meltdown locally, is for the government to aggressively support and encourage entrepreneurs / SMEs most especially during these times,” Lee added.

Philippine Star

Tsikot.com Philippines

Korean automobile distributor Hyundai Asia Resources, Inc. (HARI) received regulatory approval on Wednesday to hike its capital fourfold to P1 billion.

British Virgin Islands firm Kibo Holdings Ltd., which owns half of HARI, increased its stake in the company by subscribing to the entire stock increase but paid for only P200 million, documents from the Securities and Exchange Commission (SEC) showed.

The SEC also approved HARI’s ammendment articles of incorporation that shifted its primary purpose to being an automobile manufacturer and assembler from only a distributor. The firm’s board approved the capital hike and the ammendments to its incorporation on Sept. 30.

In a telephone interview, HARI Corporate Secretary Eduardo L. De Jesus declined to provide details about the company’s ammendment of its primary purpose or its plans for the proceeds from the capital, saying he was not at liberty to discuss these.

Earlier this month, South Korean diplomats said several of their large local companies including Hyundai Motor Company, which is looking to build a $1 billion car plant, were eyeing the Philippines for manufacturing facilities. The officals, however, said high power costs and foreign ownership restrictions discouraged more investments.

Mr. De Jesus would not say whether the HARI’s moves were connected to Hyundai’s plans.

HARI is the official distributor of Hyundai vehicles in the Philippines. It has 32 distributorships in the country, according to its Web site.

by Don Gil K. Carreon, Business World Online

Tsikot.com Philippines

A Chinese car manufacturer is planning to invest $1 billion for an assembly plant in the country.

“We are already in serious negotiations with the manufacturer. They have expressed genuine interest in putting money here,” Francis Chua special envoy for Chinese investment and trade told The Star in an interview.

According to Chua, the slowdown in the global economy has not dampened the investment behavior of the firm.

The investment is being seriously considered in spite of the move of car manufacturers to lower sales expectations for this as a result of the slowdown in world demand specifically the US.

During the visit of President Arroyo in China last August, she has scored $6.4 billion worth of investment commitments in housing, cement, mining, and manufacturing.

The largest investment is from Sunshine 100 at $5 billion for a housing development.

Sunshine has an existing exposure in the Philippines under a joint venture undertaking with a local partner.

Trade Secretary Peter B. Favila said the plan is to enter the housing market across all categories – low cost, middle market and high-end.

Sunshine has signed a memorandum of agreement with the Philippine Retirement Authority (PRA) to build housing units for retirees.

Meanwhile, China Fiber Corp. will invest $1 billion for a thread manufacturing plant using banana and palm fibers to produce thread that will be used in the manufacture of clothing. The plant, which will be set up in Davao, is expected to produce 20,000 metric tons of thread annually.

Another investment worth $300 million worth of investment will be from the Fujian Loonglin Group Co., Ltd. for a cement manufacturing plant.

Fujian chief executive officer Yujian Xu has expressed a desire to open a cement plant in Antipolo City. The entry of Fujian, one of China’s biggest cement manufacturers producing high-yield, quality cement in the local cement industry could benefit the real estate sector of the economy in the country.

The Wei Wei Group plans to increase its investments in the Philippines through its domestic partner, Golden Harvest, for the construction of a $100-million nickel smelting plant in Zambales.

By Ma. Elisa P. Osorio, Philippine Star

Tsikot.com Philippines

The Philippine car industry expects sales to slow next year as a result of a global economic downturn which threatens to cut consumer spending, especially among families dependent on relatives working abroad.

But for the moment, the Chamber of Auto Manufacturers of the Philippines, Inc. (CAMPI) remains confident that its 2008 sales target of 125,000 vehicles — “the most in more than a decade” — will still be met.“At this point in time, we are still going to be able to reach our target,” CAMPI President Elizabeth Lee told BusinessWorld yesterday.

“That’s the target for this year.”

She said the group expects to post strong sales going in to the fourth quarter, when seasonally more cars are sold.

“Actually, last quarter was one of the stronger quarters. Hopefully, the global meltdown is not going to hit us that hard,” Ms. Lee said.

Ms. Lee, who is also executive vice-president at Nissan distributor Universal Motors Corp., said growth towards the end of the year will still be driven by sales of Asian utility vehicles, pick-up trucks and vans, often used for businesses by entrepreneurial buyers.

She said the three segments combined make up around 60% of total car sales.

The local automotive industry sold more than 100,000 vehicles last year, the first time since the Asian currency crisis. CAMPI is scheduled to release its October sales report today.

Last month, CAMPI reported overall sales for the January to September period of 94,131 units, or almost a 12% increase from the same period last year.

For the month of September alone, the industry sold close to 11,000 units for a similar near 12% gain.

Ms. Lee, however, said sales could slow down next year as overseas Filipino workers (OFWs) affected by the global financial crisis send less money to their families in the Philippines.

“We’re still banking on OFW remittances … although, that may slow down a little bit,” Ms. Lee said.

“The minimum [CAMPI] is looking at for next year is flat growth,” she added.

Economist Benjamin E. Diokno said this should be expected given battered consumer confidence, adding “That’s still on the optimistic side.”

He said consumers nowadays were less inclined to invest in expensive goods like cars, due to the fear that a bearish economy may leave them unemployed in the near future.

Business World Online

Tsikot.com Philippines

The Philippines can still catch on with its dream of becoming an automotive manufacturing hub in the region because Thailand cannot fully serve the requirements of a region with 600 million population and a faster growing economy.

Ford Group Philippines Chairman Henry Co said this in his presentation during a Local Government Conference for Sustained Philippine Competitiveness.

“It is not too late, we have the capability to develop one. We can still become the United States of ASEAN,” Co said.

In a region of 600 million with some of the faster growing economies in the world, he said, there is an opportunity for another country other than Thailand to be a manufacturing hub for automobiles.

“The Philippines alone with its 90 million population needs a manufacturing industry,” he said.

To support his idea, Co presented a data from the Bureau of Export and Trade Promotion showing the rising number of imported completely built-up motor vehicles.

The data showed that CBU imports reached 230,000 units in 2003 and 2004 while exports of locally-assembled CBU units were only slightly over 150,000 units. Imports surged in 2005 to 310,000 units but CBU exports slightly improved only to 170,000 units.

In 2006, CBU imports went up to 460,000 units while exports substantially declined to 90,000 units.

“But giving up local manufacturing and maintaining a status quo of the present situation are not options,” Co said.

Co cited the economic value that the manufacturing chain of assembling cars could create.

“If no one builds cars, no one will make seats, aluminum wheels, wiring harnesses, brake tubes, castings, stamping parts, paint, chemicals, glass, etc.” he said.

To push for the automotive program, Co said there are only two models for development: the government subsidizing a national car program like the Malaysian model or encouraging auto multinationals to invest here like the Thailand model.

So far, the highest level of automotive parts manufacturing in the local industry is engine and transmission assembly.

There also other related industries like seats, seat frames, foam pads, seat covers, interior trims, door sidings, carpets, molded and extruded rubber, tires, AI, steel wheels, wiring harness, batteries, starter, alternator motor, small and some large plastic injection, small stamping parts, insulation, paints, sealers and other chemicals.

To help push for this industry’s development, Co also urged the LGUs to create an enabling environment to nurture and promote more manufacturing activity.

“Build confidence and stable environment,” Co told the LGU executives.

By Bernie Cahiles-Magkilat, Manila Bulletin Online

Tsikot.com Philippines