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Nissan shuts down PH assembly plant

  • Nissan will cease assembly operations for Nissan’s Almera model
  • The Nissan decision follows closely that of Honda and Isuzu, highlighting the impact on the local auto assembly industry of the surge in vehicle imports, according to the trade department
  • The closure is part of the Nissan group’s global plan to optimize production and increase efficiency of business operations in ASEAN
  • Nissan’s marketing and distribution network will continue to operate, selling units imported mainly from Thailand and Japan

Car manufacturer Nissan Philippines will close its operations in the Philippines as part of the group’s global plan to optimize production and efficient business operations in the Association of Southeast Asian Nations (ASEAN) region.

Nissan on January 20 informed the Department of Trade and Industry (DTI) that it will cease assembling its Almera model in the country.

“The announcement of Nissan to close their assembly operations in the country is regrettable, as these developments all the more demonstrate the critical situation of the local motor vehicle industry. Thus, the provisional safeguard measures need to be immediately put in place to protect the domestic industry from further serious injury,” Trade Secretary Ramon Lopez said in a statement.

Based on international news reports, since 2019, Nissan has already closed plants across Europe, US and developing countries and laid off some 42,500 workers globally. Moving forward, it plans to further cut global production capacity by 20% as well as the number of models offered to the market.

In the Philippines, Nissan Almera’s sales of around 4,500 represent just 1% of the total vehicle market and its assembly activity employs 133 workers. Introduced in the country in 2011, the current third-generation Almera has likewise over-extended its model life cycle.

The stoppage of assembly has been expected as Nissan in its earlier discussions with DTI had intimated it was already contemplating closing down last year given weaker volume sales and low market share of the Almera. Nissan had in effect extended its stay, DTI noted. The car maker’s major sales come from imported pick-ups and sport utility vehicles.

Nissan reassured DTI that the 133 assembly workers to be laid off will be provided reasonably compensated and are the only ones affected, as operations of its marketing and distribution network will continue to sell units imported mainly from Thailand and Japan.

Moreover, the Department of Labor and Employment and the DTI regional offices will collaborate on providing affected workers with manufacturing jobs.

“The stoppage of Almera’s assembly operations, following closely that of Honda and Isuzu, only highlights that the local auto assembly industry is critically impacted by the surge in imports and will thus benefit from the time-bound safeguard duty,” Lopez said.

READ: DTI slaps safeguard duties on imported passenger cars, light vehicles

He was referring to the imposition of provisional safeguard duties on imported passenger and light commercial vehicles to protect the struggling domestic motor vehicle manufacturing industry.

The provisional safeguard duties will be in the form of a cash bond amounting to P70,000 per unit for imported passenger cars and P110,000 per unit for imported light commercial vehicles.

DTI is moving to impose the safeguard duties after determining that increased importation of passenger cars and light commercial vehicles is a substantial cause of serious injury to the domestic motor vehicle manufacturing industry.

Lopez noted that DTI is taking a comprehensive approach to reviving the country’s automotive industry by employing coherent policy measures while still maintaining fair trade and the contestability of the market for imports.

Moving forward, measures to create a more attractive investment climate include proposed incentives under the Corporate Recovery and Tax Incentives for Enterprises bill, Public Service bill, Rice Tariffication Law, and the Build, Build, Build infrastructure program.

DTI noted that the Philippine automotive market is one of the most open among the larger ASEAN member countries. For instance, Thailand imposes an 80% Most Favored Nation tariff rate on completely built-up units originating outside ASEAN.

Meanwhile, with various non-tariff measures on motor vehicles in place, Indonesia has effectively discouraged imports, which account for only 7% of Indonesia’s domestic market. This is in contrast to the Philippines, where locally assembled light commercial vehicles account for only 7% of the market.

Nissan is currently leasing the manufacturing facility owned by Taiwanese company Yulon Group. The plant itself will be kept, similar to how the Honda’s facility, remained intact.

Lopez hopes the plant can be used for the next entrant to local assembly of cars when the business climate improves after the pandemic.

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