PILIPINAS Taj Autogroup Inc., the distributor of Tata vehicles, is eyeing to locally assemble three commercial vehicle models in the country. The company has also filed an application to the Motor Vehicle Development Program (MVDP) of the Board of Investments (BOI).
This move to shift from distributorship to assembly, particularly of small commercial vehicles, is in line with a broader plan to participate in the public-utility vehicle (PUV) modernization program of the Department of Transportation (DOTr).
“We want to look into all classes of the [modernization] program,” Arthur A. Balmadrid, vice president and general manager of Pilipinas Taj, said.
The auto firm is planning to locally assemble three models, all with the potential to be included in the classes of jeepneys identified in the PUV program.
Pilipinas Taj will be assembling the Ace, Super Ace and the SFC 407. The Ace and Super Ace can qualify for Class 1 jeepneys, while the SFC407 can be considered for the Class 2, Class 3 and Class 4 jeepneys, Balmadrid said.
The Bureau of Product Standards (BPS) of the Department of Trade and Industry has already crafted specific technical guidelines for the PUV. According to the bureau, their definition of Class 2 refers to the United Nations Economic Commission for Europe (Unece) categories for vehicles.
The Unece promulgates its own standards for classifying vehicles. Class 1 shall refer to the Unece Category M2 Class B, for a minimum of nine and a maximum of 22 all-seated passengers. Class 2 shall refer to Unece Category M2 Class 1, with more than 22 passengers, some of whom can stand inside the vehicle.
Class 3 shall refer to the Unece Category M2 Class 3, with more than 22 passengers who are all seated. Class 4 shall refer to the Unece Category M2 Class 3, with more than 22 passengers who are all seated and with provisions for cargo.
The cost for the SFC407 is pegged at P 1.2 million to P 1.4 million each considering that the BPS ordered the vehicles to be affixed with facilities, such as GPS, dash camera and wireless Internet.
In manufacturing their bids for the program, Pilipinas Taj will be assembling the cab and chassis, tapping body builders like Almazora and Centro Manufacturing and importing the engine and power train from India.
The company said it plans to start with CKD (complete knock-down) assembly, then gradually localize the key auto components. The firm is even considering locally assembling the vehicle platform for all three models in the future.
To this end, the Pilipinas Taj said it will be applying to the MVDP to avail of slashed tariffs for its importation.
“Under the BOI’s program there’s a minimum investment of $8 million to participate in the MVDP,” Balmadrid said. “We’ll be applying [for] that to get the tariff benefits when we assemble.”
The company’s goal is increase local content of the three models from 40 percent to 50 percent of the vehicle.
The BOI’s MVDP incentivizes vehicle makers to have local assembly by offering a 1-percent duty on imported CKD kits.
Should Tata qualify in the PUV modernization program, it will not only benefit from the slashed tariffs but from government tax support as well, as the P9 billion from the BOI’s Comprehensive Automotive Resurgence Strategy Program was diverted to participants willing to assemble for the DOTr program.
Aside from possibly supplying the PUV modernization program, demand has also been growing for small commercial vehicles—some 2,000 to 3,000 units a month, according to Balmadrid. Imports take up 30 percent of this number.
All three models of Tata are already being distributed since the groups’ operations began in 2014. Other competitors in the small-commercial vehicle space are from L300 of Mitsubishi Corp., Hyundai Corp.’s H10 and Suzuki Motor Corp.’s Super Carry.
Shifting now to assembly will help in local-parts manufacturing and generate employment down the supply chain, the Balmadrid said. The company will be running a trial assembly for the three models before the year ends, with the intent to start official assembly next year, he added.
The Philippines will be the first country among the Asean to locally assemble the SFC407.
“We want to do it; at least start next year,” Balmadrid said. “We don’t have a capacity estimate yet but, if the PUV modernization program picks up steam, we have to fast-track our plans.”