The future of Philippine vehicle manufacturing has been thrown into some uncertainty after President Ferdinand “Bongbong” Marcos Jr. vetoed the proposed P4.32 billion budget for the Comprehensive Automotive Resurgence Strategy (CARS) and the P250 million Revitalizing the Automotive Industry for Competitiveness Enhancement (RACE) programs. The decision has prompted the Philippine Parts Makers Association (PPMA) to sound the alarm, warning that the move threatens to dismantle what remains of the country’s local production capabilities.
The funds, lodged under unprogrammed appropriations, were intended to pay government obligations to carmakers who met local production targets and to support new industry entrants.
The Philippine Parts Makers Association (PPMA) immediately sounded the alarm, calling the decision a direct threat to what remains of the country’s manufacturing base.
“A Question of Survival”
For the PPMA, the veto is not merely a budgetary adjustment but a potential death knell for local assembly.
“CARS and RACE are critical to the survival of local car manufacturing,” said Ferdi Raquelsantos, President of PPMA. “Without sustained production volumes, there is no viable auto parts industry, and without parts makers, vehicle assembly cannot survive.”
Raquelsantos emphasized the interdependence of the ecosystem: “Automotive manufacturing has always been a core industry in Southeast Asia. When you lose local assembly, you lose the ecosystem that supports it. That includes tooling, testing, engineering, and thousands of skilled manufacturing jobs.”
The ASEAN Gap: Falling Behind Neighbors
The association highlighted the stark contrast between the Philippines and its neighbors, where government policy has successfully nurtured robust automotive sectors.
* Thailand: Now the region’s hub for pickup trucks and passenger cars, producing over two million vehicles annually.
* Indonesia: Has successfully built scale around MPVs and small SUVs.
* Vietnam: Attracting fresh investments for both internal combustion and electric vehicles.
In these nations, local assembly supports a vast network of suppliers—from stamping and plastic injection to electronics and wiring harnesses. In contrast, the Philippines has seen local volumes stagnate, with the market increasingly dominated by completely built units (CBUs) imported from abroad.
According to PPMA, this shift has forced local parts manufacturers to downsize, diversify into non-automotive sectors, or survive solely on exports.
The PPMA recalled that the Philippines once demonstrated the capacity to be competitive. During the Ramos administration in the 1990s, the Car Development Program drove peak local manufacturing, fostering a wide range of locally produced components, including metal parts, interiors, and electrical systems.
“We were almost there,” Raquelsantos noted. “The factories are here. The suppliers are here. The workforce and technical know-how are here. What has been missing is policy continuity and long-term commitment.”
The CARS program was launched specifically to rebuild this scale by incentivizing high production volumes (200,000 units over six years per model), making it viable for suppliers to invest in expensive tooling and automation. The RACE program was intended to be the next step, expanding incentives to a broader range of vehicle types and new powertrains.
Fearing the Philippines will become a purely import-driven market, the PPMA is urgently calling for dialogue with legislators to explain the “multiplier effect” of the auto industry.
“This is not just about manufacturers,” Raquelsantos said. “When cars are built locally, you create jobs, develop engineering talent, and strengthen supply chains. We want to sit down with policymakers and explain how CARS and RACE help keep car manufacturing alive in the Philippines.”
The group warned that without a recommitment to manufacturing, the country risks losing the economic and technological benefits of the industry permanently.
