Automotive

Volkswagen investing US$200m in the Philippines

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Automobile manufacturer Volkswagen of Germany plans to invest as much as $200 million to build a car assembly plant in the Philippines, the top executive of the company’s local unit said Thursday.

“We are prepared to deploy the investment. We’re just waiting for favorable response [from the government],” Volkswagen Philippines president and chief executive John Philip Orbeta said at the sidelines of the Manila International Auto Show at the World Trade Center in Pasay City.

Orbeta said Volkswagen submitted a proposal to the government to put up a completely knocked-down facility before getting into manufacturing.  Volkswagen currently imports all its vehicles sold in the country.

“If they will allow us [for] phase 1 of our CKD proposal, that will be about $40 to $50 million. If we can get to phase 2, we’re ready to spend as much $150 million on top of the first investment,” Orbeta said.

He said the company was prepared to deploy the capital, but wanted to first secure an assurance from the government to allow the company to operate as an assembler.

Orbeta said Volkswagen could complete the facility in less than a year. “We’re starting the project from scratch, but we’re also a bit advanced, so we can really do the project in less than year,” he said.

Volkwagen commissioned a feasibility study on the project, being carried out by a task force composed of the Ayala Automotive Group and Volkwagen Philippines, he said.

Orbeta said the company had initial talks with the Trade Department as it expressed its intent to go into car manufacturing.

“Before we get that big, we have to start small. So we’re thinking of setting up CKD assembly at first, then later on we can go further to manufacturing,” said Orbeta.

Volkswagen launched another variant to the Polo line-up, the Polo Automatic and the Tuareg Sports Edition, during the opening of the Manila International Auto Show.

Orbeta said sales picked up to an average of 80 units monthly in the first quarter of 2015.  The company expects sales to improve to 100 units a month, in the next couple of months and eventually to 150 units, he said.

Volkswagen sold 600 vehicles in the Philippines in 2014.

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