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Philippine Business Group Ayala Intends To Manufacture Local Car Brand With Spare Parts

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March 29
8:59 AM 2016

Ayala Corporation, the largest enterprise in the Philippines in terms of assets, is getting prepared to become recognized as a larger player in local automotive manufacturing. The possibility of pouring billions of pesos in the automotive industry appears as consequence of rising consumer affluence. Furthermore, the comprehensive automotive resurgence strategy (CARS) program adopted by the Philippine government has also contributed in attracting investment for the industry.

The largest conglomerate in the Philippines has been negotiating with potential partners from the automotive industry. The business group expects to find tangible opportunities within two to three months. Ayala has been searching for investment opportunities not only in the vehicle manufacturing segment but also for auto parts and auto components, reports Philippine Daily Inquirer quoting Paolo Maximo Borromeo, Ayala managing director and group head of corporate strategy and development while covering his interview.

The conglomerate may require to invest more than ₱1 billion against each manufacturing deal. The group has been negotiating with potential companies for multiple deals.

Automotive manufacturing industry requires both capital and labor intensive. Ayala plans to scale up opportunities to expand its dominance over the industry, according to a report published in The Nation.

Laguna based Micro-Electronics Inc.(IMI), integrated arm of Ayala's electronic manufacturing services (EMS) is the second largest EMS provider for the global automotive industry, according to 2014 revenue data revealed by New Venture Research, a global market research firm. IMI accounts for a workforce of 15,000 people out of Ayala's total work fleet of 40,000 heads and appears as the largest employer unit among the all Ayala subsidiaries, reports Automotive Industry Today.

Apart from retaining particular stake in automotive industry through IMI, Ayala also owns car dealerships under multiple brands. The brands include Isuzu, Honda and Volkswagen. The Philippine business conglomerate enjoys 15% stake in the car assembling and manufacturing plants of Isuzu and Honda each in that country.

Though currently small, Ayala intends to increase its participation in the local car industry. Even the business giant has been eager to increase investment to expand Honda or Isuzu's manufacturing operations in the Philippines.

Since both the Japanese manufacturers have other plants in neighboring countries like Thailand and Indonesia, so Ayala's expansion bid has gone in vein. Ayala's participation in the automotive industry may also be expanded up to domestic manufacturing of auto parts apart from bringing local car brands under the CARS program, informs Borromeo.

Ayala Corporation, the Philippine business group owns 15% stake each with Honda and Isuzu manufacturing plants in that country. Since both the automobile manufacturers have production units in Thailand and Indonesia, so Ayala has failed in its initiative for expansion of manufacturing business. Now Ayala eyes for making deals with potential auto manufacturers to develop local car brand with multiple parties.

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