Despite the veto of funding for the Comprehensive Automotive Resurgence Strategy program in the proposed 2026 national budget, the government says it has enough fiscal room to honor its commitments to car manufacturers and auto parts makers, signaling continuity rather than retreat in its automotive policy.
Economic managers from the Department of Budget and Management, the Department of Trade and Industry, and the Department of Finance said existing mechanisms allow the state to settle outstanding obligations even without fresh appropriations for CARS next year.
According to the agencies, fiscal support arrearages can be covered by realigning funds within the current budget cycle, particularly by adding a specific line item under the DTI–Board of Investments allocation for 2025.
The funds, they explained, will be sourced from verified savings generated by the Department of Public Works and Highways, which declared excess allocations during the 2025 fiscal year. These savings, once validated, can legally be redirected to meet the government’s commitments to automotive participants.
Officials said tax payment certificates already issued and confirmed provide a clear basis for settlement, covering incentives owed to major manufacturers such as Toyota and Mitsubishi, as well as qualified local parts suppliers.
The assurance comes amid growing concern within the industry that the absence of CARS funding in the 2026 budget could signal waning state support.
Budget Secretary Rolly Toledo sought to allay those fears, stressing that the veto should not be interpreted as a withdrawal from the automotive sector.
He said the government remains committed to meeting its obligations and sustaining confidence among manufacturers that have already invested heavily in domestic production.
Finance Secretary Frederick Go echoed the sentiment, emphasizing that the auto industry continues to figure prominently in the country’s long-term industrial strategy. He said the sector remains central to job creation, technology transfer, and broader economic growth, even as fiscal priorities are recalibrated.
The issue gained urgency after Senator Sherwin Gatchalian raised concerns over the combined veto of the CARS and the Revitalizing the Automotive Industry for Competitiveness Enhancement program. He previously warned that unpaid incentives to participating companies had reached roughly ₱4.2 billion, a figure that, if left unresolved, could undermine investor confidence.
By pointing to available savings and existing budgetary tools, economic managers are now trying to reframe the narrative around the veto.
Rather than a signal of policy reversal, they say it reflects a timing and funding adjustment—one that still preserves the government’s ability to pay its dues and keep the country’s automotive roadmap intact.