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MANILA - (UPDATED 9:12 p.m.) Isuzu Philippines Corporation on Friday served notice that it may shut down its local assembly of the DMax pickup truck amid high costs.
In a briefing, the Japanese carmaker's executives said the company may stop production next year, as local assembly costs $1,800-2,000 more than in Thailand.
Shutting down the DMax assembly line, which produces 3,000 units a year, would displace 30,000 workers in the parts business. Isuzu Philippines sources a fourth of its parts from the local market.
Arthur Balmadrid, Isuzu Philippines senior vice president for sales, said the company would go the way of Ford Motor Philippines, which earlier announced it was shutting down its assembly operations, if the government fails to provide incentives.
He said incentives are required to keep assembly costs down especially with Asean entering a zero-tariff regime.
Closing an assembly line has a domino effect in the downstream market, Balmadrid said, adding that this already happened with Ford and its auto parts suppliers.
He said the company must first survive before it can export vehicles, a condition the government wants to impose on automakers before getting tax and other perks.
Like most local assemblers, Isuzu Philippines has to contend with the onslaught of cheaper Chinese cars and imported second-hand vehicles.
Among the incentives the company is asking from the government are tax perks for local parts makers, lower excise tax for trucks and AUVs, and strict implementation of law prohibiting government agencies from buying completely built up imported vehicles.
Balmadrid said the problem is the government is not even following the law, with some agencies using second-hand imported vehicles.
Isuzu used to be among the top three motor vehicle manufacturers in the Philippines, particularly when its Asian utility vehicle lineup had enjoyed tax perks. Since the incentive ended, the company's share of the market has gone down.
Established in the 1950s, the Philippine unit of Isuzu made its mark through its lineup of trucks. On August 7, 1995, Isuzu Philippines Corporation was born as a joint venture among two Japanese firms - Isuzu Motors Limited and Mitsubishi Corporation - and two Filipino companies - Ayala Corporation and Rizal Commercial Banking Corporation.
Isuzu Philippines has 13 hectares of industrial land at the Laguna Technopark in Biñan, Laguna, where the company has a plant that could produce 15,000 units a year.
Besides DMax, the company produces 7,000 units of Asian utility vehicles and 2,000 units of trucks in the country each year.
In the first eight months of this year, the company enjoyed a 21 percent growth, selling 1,022 units of its N-Series of light-duty trucks for a 69 percent share of that segment of the local market.
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