The automotive industry in the Philippines is one of the largest in the Asia-Pacific region, with approximately 441.4 thousand vehicles sold in 2023. Most of the vehicles sold and built in the Philippines are from foreign brands.
For the most part, the Philippines is dominated by Japanese automobile manufacturers, like most of its ASEAN neighbors. Automobile production is upheld by the Philippine Motor Vehicle Development Program implemented by the Board of Investments. In addition, there are also a small number of independent firms that assemble and fabricate jeepneys and other similar vehicles, using surplus engines and drivetrain parts mostly from Japan.
The Philippine automobile industry consists of two sectors: motor vehicle assembly and vehicle parts manufacturing. The country also has active premium vehicle and commercial vehicle markets.
Automobile sales in the Philippines mostly consist of locally assembled and imported cars, notably from Thailand, Indonesia, and other such countries. In 2019, an imported vehicle coming from Indonesia cost 24 percent less than a locally made equivalent. The same cost difference applies to completely built-up cars from South Korea (also 24 percent) and Thailand (18 percent). The country also imports cars from China, India, and the United States.
History The Philippine automobile industry started during the American colonial period from 1898 to 1946. Cars and motorcycles were introduced around 1901 and made available in the country by trading companies. The general population was accustomed to animal-drawn vehicles; initially, only the wealthy could afford to buy and own these newly introduced automobiles. In those days, it took at least three months to ship a car from Europe or the US to Manila.
Dr. Juan Miciano is acknowledged as the first Filipino to buy and operate a motor vehicle—a French-made Richard-Brasier which he bought in 1901 according to a 1910 motor car directory. Prior to that, the US Army Signal Corps had in December 1900 brought a number of Woods electric cars into the country for military use only. It marked the early appearance of motor cars in the country.
In 1931, the Automobile Association Philippines (AAP), the country's largest and oldest car club, was born as the Philippine Motor Association (PMA), a non-stock corporation and nonprofit organization. The PMA was founded by Jorge B. Vargas, Carlos P. Romulo and Albino SyCip. In 1951–1952, it became an affiliate of the Alliance Internationale de Tourisme and Fédération Internationale de l'Automobile. In 1953, Philippine President Elpidio Quirino officially named it the National Auto Club. In 1963, it was authorized to issue the Philippine International Driving Permit. The PMA's first office was located at the Manila Hotel; in 1937, it relocated to the Legarda-Hermanos buildings in Quiapo, Manila. In the 1980s, it relocated to AAP Tower at 683 Aurora Boulevard in Quezon City. Currently, it is led by President Augustus V. Ferreria and Vice President David L. Arcenas.
During the early days of the Filipino automobile industry, American-made marques such as Mercury, Buick, Chevrolet, Ford, and Dodge dominated the market from the 1920s through the early 1970s. The country pioneered the establishment of automotive assembly in the Southeast Asian region. An import substitution policy introduced in the 1950s led to a ban on fully-built vehicle imports, which was later replaced by high tariffs from 1951 until 1972.
American- and European-made cars were a common sight on the country's road by the 1960s. In that same decade, Japanese-made cars were introduced to the market. The Philippine auto industry was at the forefront of the Southeast Asian auto industry during that period. By the mid-1960s, fuel economy and practicality became important criteria for a growing number of car buyers in the country, which the Japanese car manufacturers were best equipped to serve. Consequently, General Motors (among other American manufacturers) utilized its European and Australian subsidiaries, Vauxhall and Holden, to introduce mid-size and compact cars to compete with Japanese marques in the expanding market.
Localization
In the 1970s, local production of automobiles in the Philippines began in 1975 with mostly passenger cars and some commercial vehicles. During the 1973 oil crisis, then-President Ferdinand Marcos advised Filipinos to buy smaller, more efficient vehicles with four-cylinder engines. Demand for American-style full-size sedans subsequently fell in favor of smaller, more economical cars. By the mid-70s, the popularity of full-sized American cars had quickly dwindled and the compact, subcompact, and some mid-sized cars have quickly become popular ever since then.
In 1973, the government instituted the Progressive Car Manufacturing Program (PCMP), a system with scheduled increases in local parts content requirement, which also allowed program participants to import a certain proportion of completely built-up vehicles. The original participants were General Motors, Ford, PAMCOR (Philippine Automotive Manufacturing Corporation, a Chrysler/Mitsubishi joint venture), Delta Motors Corporation (Toyota), and DMG Motors (Volkswagen). DMG attempted to domestically produce a "national car", the Country Buggy-based Sakbayan (a portmanteau of sasakyang katutubong bayan, "original national vehicle"), as well as the Trakbayan light truck. This project, however, did not last long.
During the 1980s, Japanese and some European marques dominated the Philippine market. However, by 1985, following the political and economic turmoil that worsened with the assassination of opposition politician Ninoy Aquino, several car manufacturers left the Philippine market. Cars like the Nissan Stanza and Mitsubishi Lancer were the only choice left for new car buyers, while most people drove older cars, resulting in a drastic nationwide industry downturn. In this era, Thailand would gain a reputation as the "Detroit of Southeast Asia", with their industry currently ranking 1st in Southeast Asia and 12th globally.
After Marcos
The original PCMP members—Toyota, Mitsubishi, and Nissan—resumed business operations in the Philippines in 1988 after the People Power Revolution ousted Marcos in 1986, and eventually, no less than 13 manufacturers vied for a market limited to around 100,000 cars per year. With the recovery of the country's economy from the 1980s until the mid-1990s, the automotive industry followed suit, with local vehicle manufacturers hitting 138,000 units in 1996. This figure is 85 percent of the domestic vehicle sales of the period.
During the 1997 Asian financial crisis, several makers withdrew as sales tanked, becoming de facto completely built up (CBU) importers rather than assemblers. Since 1998, the Philippine automotive manufacturing policy has been in a flux, undermined by the abundance of lightly used cars from Japan and South Korea.
A new tax reform program in 2002 undermined local assembly further by lowering sales taxes on the cheapest microcars sold in the country, most of which were imported from other ASEAN countries or China. Meanwhile, the popular locally assembled Asian utility vehicles (AUVs) with high Philippine parts content were hit with considerable sales tax increases due to their larger engines and higher upfront prices. Total industry sales plummeted to five digits annually from 1998 to 2006. In 2007, car sales in the Philippines began to climb to pre-crisis levels, during which total sales reached 144,435 units. Production of completely knocked down (CKD) cars remained stagnant after the 1997–1998 economic crisis, and since 2008, CBU imports have outnumbered locally assembled cars.
The 2010s saw the arrival of new car brands and models to the Philippines. From 2015 onwards, the country's automobile market began progressing, before again struggling due to the COVID-19 pandemic. Even before the pandemic, sales were greatly affected by the 2020 Taal Volcano eruption. Although sales are recovering, monthly average sales are still significantly below pre-pandemic figures.
Government programs
Progressive Car Manufacturing Program
In 1973, President Ferdinand Marcos signed the Progressive Car Manufacturing Program (PCMP). Innitially, four car manufacturers were chosen to be part of the program, but Ford Motor Company was determined not to be left out. Ford proposed to the government that, if included, it would provide a stamping plant. After an 11-hour proposal, the deal was settled and PCMP ended being a five-participant venture. The program consisted of Delta Motors Corporation (Toyota), General Motors Pilipinas, Ford Philippines, DMG, and PAMCOR (Mitsubishi and Chrysler).
Each of the five PCMP participants was spurred to produce an affordable AUV completely from local materials, designed for local needs. To simplify tooling and repairs, all of the AUVs' body parts were flat stamped, with no compound curves. The most successful of the AUVs in the Philippines were the Toyota Tamaraw and Ford Fiera. Ford and Toyota combined common chassis cabs with different upfits for specific lines of work, such as farming and fishing. To reach affordability goals, Ford prepared project studies for varied uses and entered a financial arrangement with Citibank to give additional consideration if the applicant would follow the project study.
The other remaining three car manufacturers that were part of the PCMP program made their own AUV to compete in the local market. These included the Mitsubishi Cimmaron (which was largely replaced by the Mitsubishi L300 in the Philippines), DMG/Volkswagen Sakbayan, GM Harabas, Isuzu KC20, and Nissan Bida. The Bida was designed as a fourth-generation Ford Fiera, but as a result of Ford leaving the market in 1984, Nissan bought the rights to the design and sold it as a Nissan. Delta/Toyota also developed a local SUV mainly for military use, the Delta Mini Cruiser.
After the early 1980s financial collapse, 3 PCMP members withdrew, leaving only Nissan and Mitsubishi. The program was considered to be a failure, as stated by then-Prime Minister Cesar Virata. He admitted that since 1975, not one of the five participants in the PCMP had produced a car that could be considered "Made in the Philippines." For example, the Ford Fiera was assembled at Ford Lio Ho Motor in Taiwan, while the Toyota Tamaraw was of Indonesian origin.
Car Development Program (CDP)
In 1987, the PCMP was replaced by the new Car Development Program (CDP) with lower local parts requirements. The original participants of the program were Mitsubishi, Nissan, and Toyota, who built domestic assembly plants as per the program. In 1990, the addition of the People's Car Program to the CDP paved the way for the entry of new manufacturers such as Honda, Kia, Fiat, and later Proton. Honda locally assembled the Accord, Civic, and CR-V, Fiat assembled the Uno, Kia assembled the Pride, and Proton assembled the Wira and a couple of Volkswagen vehicles for the local market. A Luxury Car Program was also added in 1992 as part of the CDP amendment. It saw the entry of Volvo and BMW, and the re-introduction of Mercedes-Benz. The Volvo 850 and BMW 3 Series (E36) were assembled in the country for a time in the form of semi-knocked down (SKD) kits.
Public Utility Vehicle Modernization Program (PUVMP)