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Mitsubishi Motors to build compact car in Philippines

Mitsubishi Motors will step up auto production in the Philippines.

MANILA -- Lured by tax incentives, Mitsubishi Motors plans to start producing a small vehicle in the Philippines as early as 2016.

     The Japanese carmaker seeks to churn out an annual 30,000 or so Mirage compacts. It is also planning new molding facilities. With new-auto sales growing as the economy expands, Mitsubishi Motors sees the country joining Thailand and Indonesia as a pillar of operations.

     The cars will be made at a plant purchased from Ford Motor in 2014. This facility, located in Laguna Province south of Manila, produces the Adventure utility vehicle and the L300 commercial vehicle. Adding the Mirage will likely lift output to the level of 50,000 a year. Mitsubishi Motors anticipates capital investment of around 10 billion yen ($80.1 million).

     A government program announced in June offers tax incentives to companies that build cars here -- effectively a subsidy. Since there are not enough local subcontractors that can make vehicle components, production costs will exceed those in Thailand and elsewhere by about $1,000. The tax incentives will make up for these costs.

     To qualify, an automaker will have to produce 200,000 vehicles over six years, starting in 2016. Mitsubishi Motors plans to build more than 30,000 Mirages a year.

     The company has made inroads here since the 1960s. It trails only Toyota Motor in market share at roughly 20%. Positioning the Philippines in line with such other major markets as Thailand and Indonesia, Mitsubishi Motors plans to double annual sales here to 100,000 vehicles by 2020. Mitsubishi Motors will tout the fuel economy of the Mirage, its mainstay compact car.

     Toyota has applied for tax incentives on the Vios compact, a popular model often used as a taxi here. The company is leaning toward boosting production 10-20%, although the scale of additional capital investment has not been decided. For now, it will add personnel and raise facility operating rates, lifting annual output above 30,000 units to qualify for the tax breaks.

     Auto sales in the Philippines rose 30% on the year to a record 270,000 units in 2014. But only 88,000 of those vehicles were built here. The tax incentives aim to develop the domestic automaking industry and create jobs. The government sees increased employment putting more money in people's pockets, further buoying sales.

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