Jilted

Volkswagen, the German auto manufacturer which overtook Toyota as the world’s largest assembler this year, is reportedly no longer interested in putting up a US$200 million manufacturing plant in the Philippines.

More than the higher labor and electricity cost in the Philippines compared to Thailand, VW is said to have been turned off by an inflexible requirement under the Aquino administration’s Comprehensive Automotive Resurgence Strategy (CARS) Program.

Under the CARS program signed into law by President Aquino last May 29, three automakers would be given tax  incentives of P9 billion each to produce a minimum of 200,000 vehicles in six years or 33,000 per year.

Those privy to VW’s decision to look at Thailand instead revealed that the German assembler, like Ford, Isuzu and Honda, have found the 33,000 annual production requirement to be overly ambitious.

VW’s stillborn plant in the Philippines was projected to build 25,000 units with an allocation of 10,000 units for the local market and the remaining 15,000 for export. The difference between 33,000 and 25,000 proved too much for VW considering it sold only 600 units in the Philippines last year.

Pundits see the CARS Program failing to realize its objective of attracting P27 billion in new investments and 200,000 direct and indirect jobs because the incentives it offers cannot offset the higher labor and electricity costs in the Philippines.

Likewise, Thailand is also offering the very same tax incentives the Philippines laid down under CARS. –End-

Image by: Tire Kicker