The performance of the Philippine automotive industry has steadily improved after the Asian crisis. However, relative to the performance of the automotive industry in other countries, the automotive sector in the country has languished. To understand the challenges being faced by the automotive assemblers, as well as parts and components manufacturers, the innovation capability and activities of selected establishments are analyzed following the framework developed by Bessant. This paper finds that despite having an awareness of the importance of technology and upgrading, some of the automotive firms are not able to translate this awareness into other technology activities.