Veto yanks ‘critical lifeline’ from auto industry, parts makers say

By Justine Irish D. Tabile, Reporter

THE removal from the budget of fiscal support for the Comprehensive Automotive Resurgence Strategy (CARS) and the Revitalizing the Automotive Industry for Competitiveness Enhancement (RACE) programs removed a “critical lifeline” to an already-struggling industry, auto parts makers said.

In a statement on Wednesday, Philippine Parts Makers Association (PPMA) President Ferdinand A. Raquelsantos said: “The CARS and RACE programs were designed to rebuild vehicle assembly volumes, strengthen local parts manufacturing, and allow the Philippines to regain competitiveness within the ASEAN automotive landscape… For PPMA, these programs are not merely support mechanisms but critical lifelines,” he added.

Items from the budget vetoed by President Ferdinand R. Marcos, Jr. included unprogrammed appropriations worth P92.5 billion, including fiscal support for the CARS program worth P4.32 billion.

This funding was meant to pay off the government’s obligations under the CARS program, including a still-being-evaluated application from one of the participants.

The President also vetoed P250,000 in fiscal support for the RACE program.

“The Philippine auto parts industry needs CARS and RACE to survive … Without sustained and predictable government support, local manufacturers will continue to lose ground, investments will slow, and skilled jobs will disap-pear,” Mr. Raquelsantos said.

The PPMA expects the gap with regional rivals to widen as other countries accelerate investment in new technology and supply chains.

“The reality is we are already lagging behind the Association of Southeast Asian Nations,” Mr. Raquelsantos said.

“Automotive manufacturing has always been a cornerstone industry in Southeast Asia. If we allow our ecosystem to weaken further, it will be extremely difficult to recover,” he added.

In response to the veto, the PPMA called for constructive dialogue with the members of Congress to better explain how automotive industry programs work and why they matter.

“We want to engage, not confront … The auto industry is ready to sit down with our legislators to educate them on how CARS and RACE drive jobs, investments, and long-term industrial resilience. This is about building a com-petitive manufacturing base for the country,” he said.

“Time is critical. Without decisive action, the Philippines risks being permanently left behind in one of the region’s most strategic and value-generating manufacturing industries,” he added.

Foreign chambers, including the European Chamber of Commerce of the Philippines (ECCP), also expressed concerns on how the veto will potentially impact foreign investor confidence.

“We respect the objective of strengthening fiscal discipline and accountability. At the same time, ECCP stresses that honoring existing government commitments is critical to sustaining investor confidence, especially for long-term, capital-intensive manufacturing investments,” the ECCP said in an e-mailed response to a BusinessWorld query.

“Any uncertainty in the settlement of CARS obligations may raise concerns on policy predictability. We encourage the relevant agencies to clearly communicate how and when these commitments will be paid and through what funding mechanism, as the commitments under CARS were already factored into investor decisions,” it added.

Immediately after the President announced the veto, Trade Undersecretary and BoI Managing Head Ceferino S. Rodolfo said that the agency is working with other government agencies to look for a mechanism that will ensure payment of CARS arrears.

Separately, the ECCP said it welcomes investigations into and enhanced oversight over public spending.

“To meaningfully strengthen investor confidence, accountability must be applied consistently and without exception,” it said.

“Ensuring that those responsible for significant violations are held to account, not only minor actors, will be essential in demonstrating the seriousness of reform efforts,” it added.

The chamber said investors will closely look at whether the 2026 national budget provides clarity, consistency, and reliability in its implementation.

“The timely settlement of valid government obligations, transparent procurement processes, and the efficient execution of priority programs will serve as important signals of policy credibility,” it added.