Car Development Program

Also known as: CDP · Car Development Program (1987) · People's Car Program (1990 amendment) · Luxury Car Program (1992 amendment)

Government

Definition

The Car Development Program (CDP) was the Philippine automotive industrial program established in 1987 under President Corazon C. Aquino to replace the collapsed Progressive Car Manufacturing Program (PCMP) of the martial-law era. Administered through the Board of Investments, it restarted car assembly on more modest terms: the local content target for assembled vehicles was set at 32.26 percent for 1988, rising to 40 percent in 1990, and the original participants were the Japanese assemblers that had survived the PCMP’s implosion — Mitsubishi, Nissan, and Toyota, which built domestic assembly plants under the new rules. (ERIA — Auto and Car Parts Production in the Philippines, Wikipedia — Automotive industry in the Philippines)

The CDP was repeatedly amended to widen, rather than deepen, the industry. A 1990 amendment created the People’s Car Program (PCP), opening participation to Honda Motors, Columbian Autocar (Kia), Transfarm, Italcar Pilipinas (Fiat), and Asian Carmakers (Daihatsu); a 1992 amendment added a Luxury Car Program that brought in Volvo and Daimler-Benz; and a 1994 amendment admitted Malaysia’s Proton under the ASEAN Industrial Joint Venture scheme. By 1994 there were thirteen accredited CDP participants — all licensed to build cars with high local-content requirements for a market that absorbed only about 100,000 locally assembled units a year. The program’s local-content logic was dismantled by the tariff liberalization of the 1990s and finally phased out by Executive Order No. 156 (2002) in compliance with the WTO agreement on trade-related investment measures. (ERIA — Auto and Car Parts Production in the Philippines, LawPhil — EO 156 (2002))

Identities

Source Type	Identity
Wikipedia	Covered within “Automotive industry in the Philippines” (no standalone article)
Wikidata	N/A
DBpedia	N/A
ProductOntology	N/A
Wiktionary	N/A
Library of Congress Subject Headings (LCSH)	Automobile industry and trade — Philippines
MeSH	N/A
NCBI Taxonomy	N/A
AGROVOC	N/A
Google Scholar	Car Development Program Philippines 1987 local content automotive industry Board of Investments
ConceptNet	N/A
OpenCyc	N/A

Also Known As

CDP
Car Development Program (1987)
People’s Car Program (1990 amendment)
Luxury Car Program (1992 amendment)

Examples and Analogies

A restart on easier terms: the CDP worked like a gym membership renegotiated after bankruptcy — everything the PCMP demanded stayed on the plan (rising local content, import privileges for participants) but the entry bar and quotas were lowered to what the surviving assemblers could actually meet. (ERIA — Auto and Car Parts Production in the Philippines)
A staircase rebuilt lower: where the PCMP had aimed at 40, 60, even 80 percent local content, the CDP re-laid the steps at 32.26 percent in 1988 and 40 percent by 1990 — the same staircase metaphor, on a humbler gradient. (ERIA — Auto and Car Parts Production in the Philippines)
A door opened for every niche: the People’s Car and Luxury Car amendments behaved like adding economy and first-class cabins to a half-empty plane — cheap-car specialists and premium assemblers were both admitted, and the roster kept growing even as the market stayed small. (ERIA — Auto and Car Parts Production in the Philippines)
Thirteen chairs, one small table: by 1994 the program seated thirteen accredited participants for a market of roughly 100,000 locally assembled units a year — a seating plan analysts compare unfavorably with Thailand’s and Malaysia’s fewer, larger players. (ERIA — Auto and Car Parts Production in the Philippines)

Usage Scenarios

1. Accrediting Assemblers

The Board of Investments registered the surviving Japanese assemblers — Mitsubishi, Nissan, and Toyota — as CDP participants, tying their privilege of importing knocked-down kits to the program’s localization schedules. (ERIA — Auto and Car Parts Production in the Philippines)

2. Meeting Rising Local Content

Participants implemented deletion schedules that lifted locally sourced content from 32.26 percent in 1988 toward the 40 percent target set for 1990, drawing on the parts industry the PCMP had built. (ERIA — Auto and Car Parts Production in the Philippines)

3. Expanding Through Program Amendments

New entrants used the 1990 People’s Car Program and the 1992 Luxury Car Program to join the CDP, and Proton entered in 1994 through the ASEAN Industrial Joint Venture route — each amendment a fresh doorway into the protected market. (ERIA — Auto and Car Parts Production in the Philippines, Wikipedia — Automotive industry in the Philippines)

4. Establishing Assembly Plants

The CDP years saw Toyota, Honda, Nissan, and Isuzu establish their assembly facilities in Santa Rosa, Laguna in the early 1990s, with Mitsubishi alone maintaining continuous operations since the 1970s — the industrial geography Philippine carmaking still occupies. (ERIA — Auto and Car Parts Production in the Philippines)

5. Exiting Into Importation

When the Asian financial crisis of 1997–98 thinned demand, several participants abandoned the CDP and became completely built-up unit importers in the deregulated market — an exit the program never penalized. (ERIA — Auto and Car Parts Production in the Philippines)

Strategies

Realistic re-entry targets: cutting local-content steps to 32.26 percent and 40 percent, rather than the PCMP’s loftier schedule, matched obligations to post-crisis capacity. (ERIA — Auto and Car Parts Production in the Philippines)
Amendment-driven expansion: instead of a single fixed roster, the CDP grew through labeled windows — People’s Car, Luxury Car, AIJV admission — each calibrated to a market segment. (ERIA — Auto and Car Parts Production in the Philippines)
Import privilege as the lever: as under the PCMP, the right to import knocked-down kits at program tariffs remained the inducement for compliance with localization schedules. (ERIA — Auto and Car Parts Production in the Philippines)
Regional integration hedge: the 1994 Proton admission via the ASEAN Industrial Joint Venture scheme reached for ASEAN scale the domestic market could not supply. (ERIA — Auto and Car Parts Production in the Philippines)
Planned retreat from mandates: when WTO rules made local-content requirements untenable, EO 156 phased out the CDP’s performance requirements rather than defend them, ending the localization era by design. (LawPhil — EO 156 (2002))

Security and Safety Measures

Accreditation and monitoring: Board of Investments registration kept the participant list closed and auditable, preserving the program against pure kit-packers. (ERIA — Auto and Car Parts Production in the Philippines)
Content verification: the 1988 and 1990 local-content milestones functioned as audit checkpoints against which participants’ localization claims were measured. (ERIA — Auto and Car Parts Production in the Philippines)
Parts-supply resilience: vehicles engineered around locally available components — the flat-panel Asian utility vehicle tradition the PCMP began — remained serviceable within the domestic parts economy. (ERIA — Auto and Car Parts Production in the Philippines)
Tariff-backed enforcement: program privileges were meaningful only because differential tariffs penalized outsiders, making the Bureau of Customs schedule itself an enforcement instrument. (ERIA — Auto and Car Parts Production in the Philippines)

Historical Context

The CDP was President Corazon Aquino’s attempt to revive localization after the PCMP foundered on the debt crisis, peso collapse, and political turmoil of the early 1980s — a collapse that by 1985 had left only Mitsubishi and Nissan assembling cars. Where the PCMP had five participants chasing 60-percent-plus content, the CDP began with three survivors chasing 40 percent, and its first decade delivered real industrial footprints: the Santa Rosa, Laguna assembly corridor and a widened parts base. The amendments then worked in the opposite direction — thirteen accredited participants by 1994 for a market absorbing about 100,000 locally assembled units a year, with the People’s Car Program adding Honda, Kia, Fiat, and eventually Proton-badged models to Philippine roads. (ERIA — Auto and Car Parts Production in the Philippines, Wikipedia — Automotive industry in the Philippines)

The program’s unmaking came from outside the factory gate. Under the structural adjustment program, tariffs on completely built-up cars fell from 70 percent in 1981 to 30 percent by 2001, while parts tariffs plunged from 30 percent in the 1980s to 3 percent by 1996–97, eroding the protection on which content mandates depended; after the 1997–98 Asian crisis only five Japanese-backed makers — Toyota, Honda, Isuzu, Nissan, and PAMCOR/Mitsubishi — were left standing, and none of those who abandoned the program lost their licenses, most becoming importers instead. Executive Order No. 156 in 2002 completed the turn, phasing out the local-content and foreign-exchange performance requirements of both the PCMP and the CDP to comply with the WTO’s TRIMs agreement and folding what remained into the Motor Vehicle Development Program. (ERIA — Auto and Car Parts Production in the Philippines, LawPhil — EO 156 (2002))

Challenges and Controversies

Thirteen Participants for a 100,000-Unit Market

The ERIA record of the program identifies over-fragmentation as its central flaw: by 1994, thirteen accredited participants shared a market of roughly 100,000 locally assembled units a year, foreclosing the scale economies that Thailand’s fewer, bigger assemblers enjoyed — the same “too many chairs” critique that had shadowed the PCMP’s five. (ERIA — Auto and Car Parts Production in the Philippines)

Content Mandates Versus Liberalization

Defenders held that the 40 percent target kept the parts industry alive; liberalizers answered that the structural adjustment program’s tariff cuts made the mandates unenforceable, and that consumers had long overpaid for protection. The dispute was settled externally by the WTO TRIMs agreement, after which EO 156 dismantled the requirements rather than contest them. (ERIA — Auto and Car Parts Production in the Philippines, LawPhil — EO 156 (2002))

Unpunished Exits

When participants abandoned the CDP after the Asian crisis, none was penalized or had licenses revoked — an enforcement vacuum analysts cite in arguing that the program’s discipline was contractual in form but optional in practice, since exit carried no cost. (ERIA — Auto and Car Parts Production in the Philippines)

The Luxury and People’s Car Compromises

The 1990 and 1992 amendments are debated as policy drift: admitting luxury assemblers alongside “people’s car” makers served political economy rather than any coherent scale plan, assembling a roster whose products spanned Kia Pride compacts to briefly built Volvo and BMW models for a market too small for either. (ERIA — Auto and Car Parts Production in the Philippines, Wikipedia — Automotive industry in the Philippines)