MANILA, June 9 (Reuters) - The Philippine unit of Japan's biggest automaker Toyota Motor Corp is planning to expand its local production capacity by as much as 20 percent in the next two years to take advantage of new government incentives.
The Philippines last week launched a scheme that will provide incentives worth $600 million over six years to its tiny auto industry in a bid to raise shrinking output and catch up with regional rivals.
Toyota Motor Philippines Corp, a joint venture with local conglomerate GT Capital Holdings Inc, is looking at increasing production capacity by 10 to 20 percent from the current 40,000 a year, said Alfred Ty, the automaker's vice chairman.
"We need to improve efficiency and we have to expand. Our capacity is quite stretched," Ty told Reuters, adding that its plant utilisation rate was already more than 90 percent.
Toyota Philippines, which has a dominant market share in the Philippine auto sector, assembles Vios and Innova models in its facility south of the capital Manila.
Under the government scheme, a car firm can get incentives for that model if the model has a track record of competitiveness, plans to make new investment in assembly and targets a production volume of at least 200,000 over six years, among other requirements.
Toyota Philippines would take advantage of the incentives through the Vios as the monthly production of 2,000 was expected to increase to 2,500, Ty said, adding that construction of a larger assembly plant could start as soon as late this year.
Given the output volume required under the plan, only the local units of Toyota and Mitsubishi Motors Corp would be eligible to apply for incentives, said Ferdinand Raquelsantos, head of motor vehicle parts industry group MVPMAP. (Reporting by Neil Jerome Morales; Editing by Nick Macfie)