Nissan closing its Philippine car assembly plant, DTI says

Japanese car maker Nissan is ceasing its assembly operations in the Philippines due to weaker sales amid the global economic downturn caused by the COVID-19 pandemic, the Department of Trade and Industry (DTI) said Thursday.

In a statement, the DTI said Nissan has informed the agency on January 20, 2021 that it will cease assembling its Almera model in the country.

The move is in line with the company’s global plan to “optimize production and efficient business operations in the Association of Southeast Asian Nations (ASEAN) region.”

Nissan’s Almera assembly plant in Laguna employs 133 workers.

Trade Secretary Ramon Lopez said the stoppage of Nissan’s assembly was expected as the company, in its earlier discussion with the department, has already hinted about closing last year given weaker volume sales and low market share of the Almera.

In the Philippines, Nissan Almera’s sales of around 4,500 represents just 1% of the total vehicle market.

Nissan’s major sales come from imported pick-ups and sport utility vehicles (SUVs).

“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,” Lopez said.

Nevertheless, Nissan assured the DTI that the 133 workers will be provided reasonable compensation packages and that only assembly workers are affected, as operations of their marketing and distribution network will continue – selling units imported mainly from Thailand and Japan.

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

Since 2019, Nissan has already closed plants across Europe, US, and developing countries and have laid-off approximately 42,500 workers globally.

Moving forward, Nissan plans to further cut its global production capacity by 20% as well as its number of models offered to the market, according to the DTI.

With the closure of Nissan’s local assembly plant, Lopez emphasized the need for the provisional safeguard measures on automotives.

“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,” he said.

“Alongside the modernized incentives being made available under the CREATE Bill, the DTI is undertaking a comprehensive approach to revive the auto industry - employing coherent policy measures while still maintaining fair trade and the contestability of the market for imports. This, together with the major reforms we are doing—such as the Public Service Act, the Rice Tariffication Law, and the Build, Build, Build program, and many more—will bring about a more attractive investment climate moving forward,” the Trade chief added.

The DTI said the Philippine auto market is one of the most open among the larger ASEAN member countries.

For instance, it said, Thailand imposes an 80% Most Favored Nation (MFN) tariff rate on completely built-up units (CBU) originating outside ASEAN. 

Meanwhile, with various non-tariff measures on motor vehicles in place, Indonesia has effectively discouraged imports and, as a result, imports account for only 7% of Indonesia's domestic market.

“This is in stark contrast to the Philippines, where locally assembled light commercial vehicles account for only 7% of the market,” Lopez said.—AOL, GMA News