Participants in the manufacture of Philippine Utility Vehicle (PhUV), a new classification under the new Motor Vehicle Development Program (MVDP), must meet a value-added of 40 percent in the first year of operation, provided the firm shall increase the value-added to 60 percent in the third year of operation, to qualify for benefits and incentives under the program.

Based on the latest draft of the Implementing Rules and Regulations of Executive Order 877-A otherwise known as the MVDP, the PhUV may fall under the Classification IV of the program. The three other regular program classifications are passenger cars, commercial vehicles and motorcycles.

The draft IRR has defined PhUV as a “power driven four-wheel vehicle that is locally manufactured from brand new driveline (engine, cooling system, transmission, differential, brake system, etc.) and chassis, used for carriage of at least ten (10) passengers and/or cargo, with gross vehicle weight (GVW) not exceeding 4.5 tons, provided it meets a value added of at least 60%. (proposed from 20% to scale up to 60%)(for review – similar to AUV).”

The value-added (VA) is computed as percent of sales shall be determined using the following formula: VA = [gross sales – (raw materials + utilities)]/gross sales x 100.

The addition of the PhUV is in support of the government’s goal to further develop the local automotive parts and components manufacturing industry and to come up with a vehicle model that is assembled only in the Philippines with a good potential for both local and exports markets.

The IRR has also required a PhUV participant to secure a long-term supply agreement.

For those assembling foreign-branded vehicles, the draft IRR has required these participants to obtain a Technical Licensing Agreement with the foreign original equipment manufacturer that will supply the knocked down parts and components and provide technology transfer, technical and production assistance and support services.