THE Board of Investments (BOI) has approved the registration of KTM Asia Motorcycle Manufacturing Inc., a partnership between the Ayala Group and motorcycle manufacturer KTM AG, as a participant to the government’s Motor Vehicle Development Program (MVDP).
The joint venture gears up to produce motorcycles in the Philippines for both the domestic market and export to Asia.
“They’re going to invest and produce motorcycles here. For the first time, we have a vehicle produced here and exported to China. We approved the registration on December 28,” said Ceferino S. Rodolfo, BOI managing head and trade undersecretary for industry development, on Tuesday. The newly approved firm is set to invest a total of P290.6 million in assembly operations (P114.17 million) and parts manufacturing (P176.46 million).
Commercial operations will begin this month with an initial 19 personnel employed in its assembly plant inside Integrated Micro-Electronics Inc., another Ayala Corp. subsidiary located at Building I, North Science Avenue in Biñan, Laguna.
The MVDP project is expected to produce four motorcycle models with an initial yearly capacity of 10,000 units, expandable by up to 20,000 units annually when fully operational. The MVDP mandates a minimum investment of $2 million in the production of motorcycles, but requires no local content requirement and provides export incentives.
Participants to the MVDP are entitled to tariff rates for knocked-down parts and components for assembly under the MVDP tariff lines of the Tariff and Customs Code.
KTM is projecting at selling around 3,000 to 5,000 units yearly for the domestic market, while the rest is for export to China, Thailand, Vietnam and Cambodia.
“With the Philippines positioned as the Southeast Asian hub for KTM, it is poised to boost its export capacity to address the rising demand among motorcycle enthusiasts in the region and nearby countries like China,” Rodolfo said.
The trade official lauded the firm’s strategy to carve out a niche as an exporter of high-end motorcycles to Asian countries—to balance the Philippines’s own high-volume importation of lower-priced motorcycles from China. Rodolfo added that the local motorcycle segment is one of the fastest-growing subsectors of the automotive industry in the region, beating the downtrend experienced in other countries.
While the final 2016 motorcycle industry sales figures are yet to be released, the Motorcycle Development Program Participants Association (MDPPA) remains confident it will surpass a million mark in sales for last year. MDPPA figures showed that from January to June 2016, a total of 544,699 motorcycle units were sold, up 42 percent from the 850,509 total units sold in 2015.
With industry growth surpassing expectations, the MDPPA is optimistic domestic sales could hit up to 2.5 million units by 2020.
The Motorcycle Industry Roadmap envisions an industry with the potential to expand manufacturing and sales operations in the country due to the affinity of the Filipinos with motorcycle usage.
1 comment
To sell and be competitive in the Phils, KTM must be able to produce motorcycles with better or same qualities as the big 4 namely Honda, Suzuki, Yamaha and Kawasaki.