A stalwart of the Philippine automotive industry reminisces on his decades of work in the business
Vince Socco is among those who dedicated the best years of their lives to the industry and continue to do so. Socco, chairman of GT Capital Auto and Mobility Holdings (GTCAM) and also Executive Vice President of GT Capital Holdings and Director and Member of the Board of Toyota Motor Philippines, helped shape the industry into what it is today: progressive, resilient, and growing despite road blocks along the way and lately, disruptions caused by the COVID-19 pandemic. Here Socco tells it as it was through the years, and provide unusual insight into the history of an industry that is vital to the country’s economic development.
By Vince Socco
The Philippine automotive industry has been through a lot. In my over four decades with the sector, I have been part of numerous ups and downs, indeed.
What struck me the most when I first entered the business was how advanced the Philippines was in terms of local vehicle manufacturing. The country was in an enviable position in Asia with the capability to locally produce transmissions (Chrysler/Mitsubishi and GM), manufacture engines (Toyota) and stamp body panels (Ford). Under the stewardship of the Board of Investments (BoI), the Progressive Car Manufacturing Program (PCMP) was incepted in 1973. The program laid out a very clear masterplan for industrialization that had the automobile as part of the core. Global car companies took notice.
Unfortunately, political upheavals in the country and a global oil crisis wreaked havoc on the economy in the early ‘80s. This undermined the fundamentals of the auto market. GM and Ford closed their factories and other continental brands abandoned their distribution operations. The vehicle manufacturing programs collapsed and our premier status as a manufacturing base for autos all but disappeared. Mitsubishi and Nissan persisted but Toyota ceased operations from 1984 to 1988 due to the closure of its beleaguered distributor at the time.
When the country started to regain economic stability in the early 1990s, the government attempted to resurrect its auto manufacturing programs. Toyota Motor Philippines started operations in August, 1988 and rejoined the ranks of local assemblers. Under the People’s Car program, Honda and Kia entered the local market. Consequently, sensing the resurgent auto market in the country, Ford and Isuzu also started local assembly. By then, however, most major car companies had already transitioned their investments and production operations to other Asean countries, particularly Thailand.
Another setback to local production was when the Philippine government became the first country in Asia to accord most-favored-nation tariffs on automobiles. This was taken by auto makers as a clear indication that the Philippines was giving up on vehicle manufacturing. The Philippine government was reacting to the World Trade Organization’s (WTO) push for trade liberalization and globalization. Likewise, the move of the Asean towards economic complementation was seen by the Philippine government as a clear signal to lower trade barriers.
The Asian financial crisis of 1997 was also a major disruptor. It upended the vehicle market and further deteriorated the foundation of what was already a significantly weakened local vehicle production sector. It took 10 years to recover the market and, by then, automakers had further solidified their investments in Thailand, Indonesia and Malaysia. The Philippines was shut out.
Of late, however, the government made a renewed bid for local vehicle manufacturing. It launched the Comprehensive Automotive Resurgence Strategy (CARS) Program that Toyota and Mitsubishi enrolled in. It was a sign of confidence in what was clearly the start of motorization in the country. From 2012 to 2017, the auto market grew by double digit rates in line with the robust expansion of the economy. As a country of 100 million people with a growing middle class, a strong market base was forecasted to provide a stable economic scale going forward.
The COVID pandemic, of course, has taken a serious toll on the auto market and local production. Toyota and Mitsubishi, however, remain confident in the outlook for motorization. Mobility, after all, is an essential part of the economy. In fact, Toyota returned to two-shift operations as early as September 2020 and has seen sales rise to within 80 percent of pre-COVID levels as of November, 2021.
Toyota remains strongly committed to its partnership with the Philippines in its goal of nation building. Despite the challenges of COVID, Toyota has not laid-off a single team member from its regular ranks. It has introduced a slew of new models and opened new dealerships. It has also pivoted to digital initiatives to meet customer requirements under a new normal.
As automobile companies transition to mobility, Toyota is positioning itself for this once-in-a-generation opportunity. Electrification of vehicles is being pursued with vigor – exploring the multiple pathways of hybrids, plug-ins, full battery and fuel cell technology. Advances in connected and shared mobility are also on the forefront of Toyota’s development programs. Most importantly, Toyota is focused on building a new world of mobility for all that is firmly rooted in sustainability and environmental responsibility.
The future of mobility in the Philippines is an exciting one. Toyota is convinced that the Philippines will present itself as the new frontier in the next wave of innovations and customer service.
Compiled by Aida Sevilla-Mendoza