The Star Business, Wednesday, June 22, 2011


SOURCE:

Wednesday June 22, 2011

Car sales impacted by amended Hire-Purchase Act

By THOMAS HUONG and EUGENE MAHALINGAM
starbiz@thestar.com.my 

PETALING JAYA: Worried about the possibility of trickling cashflow, a rise in booking cancellations and longer leadtime for completion of sales, many stakeholders in the automotive sector say the recent amendments to the Hire-Purchase Act 1967 (HPA) will hurt the car retail trade. Already, there are complaints of a slowdown in sales.

While some car marque franchise holders and dealers said they were supportive of the amendments, which aim to protect vehicle buyers from losing their booking fees and deposits paid to unscrupulous sales advisors and car dealers, among other benefits, many automotive stakeholders have described the amended Act as “confusing” and “troublesome.”

One car dealership's general manager said the situation was “unbelievable” and the amended Act overly protected consumers to the detriment of car retailers.

The Proton Edar Dealers Association Malaysia (PEDA) and Federation of Motor and Credit Companies Association of Malaysia have urged the Government to defer and review the amendments to the Act.

Ready to roll: A new car undergoing inspection before rolling out. The recent amendments to the Hire-Purchase Act may result in car buyers placing ‘phantom bookings.’

 

PEDA president Armin Baniaz Pahamin claimed that Proton car sales had dropped by 50% since last week. Another car dealership's general manager claimed that the sales of a Japanese car marque had also dipped significantly.

“Normally, the Japanese principal allocates between 150 and 200 cars to its dealers each week. In the last few days, the allocation dropped to only 10 cars. This is because until we have firm orders (meaning booking fees), we will not order the cars from the principal,” he claimed.
Under the amendments, effective June 15, all used vehicles for sale will undergo Puspakom's 18-point inspection to ensure their roadworthiness.

Another issue of contention was the 1% maximum booking fee (based on the total selling price) mandated by the amended Act, which requires car sellers to refund customers 90% of the booking fee if the deal falls through.

Armin pointed out that unlike in the past, presently car sellers or dealers could not accept booking fees before the car buyer was served with a Second Schedule notice.

“The Second Schedule notice can only be completed and served, in practise, usually after the hire purchase loan application is approved.,” he said yesterday. The remaining 9% downpayment on the car can only be paid when the hire purchase agreement has been prepared, with details such as the car's chassis number included.

This means the hire purchase agreement can only be prepared after the actual car unit has been allocated to the dealership.

“Now, with the amended Act, a car buyer can place phantom bookings' at several different car dealerships without paying booking fees. This will result in a waste of loan application resources and inefficiencies for banks and car dealers,” said Armin.

He said car buyers would have to pay more visits to car dealers or banks to sign documents.
With the amended Act, car dealers would face cashflow problems as they would lack the booking fees and downpayments as working capital to pay for the cars ordered from their principals.

Armin claimed that the Government did not consult stakeholders before implementing the amended Act.
Meanwhile, car dealers and marque franchise holders have expressed unhappiness over the issue and said the car buying process now involved more paperwork.

“We are studying the implications on our current vehicle-promotion packages,” said an industry source.
One car dealership manager in Alor Setar said the amended Act made it tough for dealers to offer “zero downpayment” or “full loan” packages.

Perusahaan Otomobil Kedua Sdn Bhd managing director Datuk Aminar Rashid Salleh said while the company supported the amended Act, automakers that sold cars in high volumes might see sales impacted.
“We may not be able to efficiently register the vehicles on time for our customers, especially during the month-end rush.

“This is due to the longer process flow that requires detailed paperwork between the banks, Perodua and our customers.”

RELATED ARTICLE:

http://star-motoring.com/News/2011/Amended-Act-expected-to-hurt-car-sales.aspx

The Star Business: Saturday March 19, 2011

European carmakers zoom in

By EUGENE MAHALINGAM
eugenicz@thestar.com.my

LAST year saw several foreign players, especially top European marques, choosing Malaysia as their base to tap the Asean market.

They include Peugeot, which had tied up with the Naza Group to make Malaysia its Asean hub and DRB-HICOM Bhd signing a collaboration and licence agreement with Volkswagen AG to manufacture Volkswagen cars at the former's production plant in Pekan, Pahang.

Industry observers reckon that European brands will also see a surge in sales over the next two years, especially with rising affluence and more affordable vehicles being introduced into the market.
And with the need for liberalisation of the local automotive industry becoming ever more pressing, European makes could be at the forefront to benefit the most.

Mercedes-Benz Malaysia Sdn Bhd (MBM)

Roland Folger says all auto players will benefit from liberalisation.

 

President and chief executive officer Roland S. Folger says that in tandem with the rapid pace of globalisation, initiatives to liberalise the local automotive sector will elevate Malaysia's position as a serious player in the regional and global automotive sector.

He adds that this would also create a more conducive business environment for foreign automotive manufacturers to target Malaysia as a base for direct investments and a catalyst to the industry's continued development.

“Although MBM will benefit from this, so will all the other auto players. More importantly, Malaysia will benefit as the knock-on effect would be a significant increase in terms of bilateral transfers of technology, expertise and human capital development.”

Folger says that to be able to reach a fully liberalised status, a country must have a very sound legal system in place to protect its liberalisation policies.

He says legislation from governing authorities and agencies such as the International Trade and Industry Ministry and Malaysian Industrial Development Authority have to be stringently enforced to prevent “rogue” countries contravening such policies by using Malaysia as their dumping ground for old and unwanted technologies and products.

“Malaysia, for instance, is a strong advocate of the anti-dumping policy so we are already off to a good start.
MBM sold a total of 6,970 vehicles in 2010, exceeding the company's best performance to date of 6,146 units in 2008.

BMW Group Malaysia Sdn Bhd

Geoffrey Briscoe says BMW will be able to price premium cars at more competitive prices.

 

Managing director Geoffrey Briscoe says liberalisation of the Malaysian automotive industry is likely to leave BMW Malaysia with the option of pricing its premium offerings at more competitive prices, thereby opening up a larger market segment to vehicles from the BMW group, including MINI and Motorrad.
“While we are already providing the full complement of BMW, MINI and Motorrad vehicles and services here in Malaysia, this levelling of the playing field will undoubtedly enhance our delivery time in introducing more vehicles, technology and innovations.”

Briscoe however feels that the liberalisation process (in Malaysia) should not be rushed or undertaken without the proper measures in place to ensure that the local automotive industry can sustain the new dynamics and increased competition that (liberalisation) would bring.

“Perhaps undertaking this process in piecemeal stages, over a period of five years would be a better method of implementation, ensuring all parties across the board are prepared for the change.”

BMW Malaysia chalked up record sales of 4,509 vehicles in 2010, which comprised 4,006 BMW vehicles, 222 MINIs and 281 Motorrads compared with 3,990 vehicles nationwide in the previous year.

Automobiles Peugeot (France)

Lionel Faugeres says Malaysia is a very important regional market for Peugeot.

 

Lionel Faugeres, Peugeot's general director for Asean and Pacific countries, views Malaysian as a very important market in the region.

“It is one of the largest passenger and commercial car markets in Asean and till today, over 80% of our sales in the region comes from Malaysia.

Peugeot's relationship with the Naza Group began in 2002 when the latter became an importer and dealer of the Peugeot brand in Malaysia.
This partnership subsequently led to the 206 Bestari project in 2006 which culminated in the 206 Bestari becoming one of the best selling continental models in the market.

“In 2008, we appointed Nasim as the official distributor for Peugeot in Malaysia. Nasim's track record in the Malaysian automotive industry and Naza Automotive Manufacturing's RM500mil plant in Gurun were key factors in our decision to strengthen our partnership with the Naza Group,” says Faugeres.

“In Naza's factory, we now assemble the new 207 Sedan, 308, 407 and 3008. We are currently working hard to prepare future launches,” he says.
Should the automotive industry in Malaysia be liberalised, Faugeres says Peugeot would like to see the introduction of the Euro 5 diesel as soon as possible.

“Peugeot has a wide range of vehicles that are powered by diesel engines but we have been unable to bring these vehicles here. Diesel vehicles offer more torque, less consumption and emit less carbon dioxide. As such, it is quite obvious that there are a lot of benefits in introducing Euro 5 diesel.”

Nasim Sdn Bhd, a member of the Naza group of companies and the official distributor for Peugeot vehicles in Malaysia, registered 3,000 Peugeot units in 2010 but had about 800 undelivered orders due to unavailability of certain units.

END OF ARTICLE... SOURCE...

 

Liberalisation in the used car market?

The Star Business, Saturday March 19, 2011

SOURCE...


Liberalisation in the used car market?

THE issue of Approved Permit (AP) has long been a contentious subject and a target of constant criticisms.
Introduced in 1970, the objective of the AP system was to promote and provide opportunities for bumiputra entrepreneurs in the automotive sector.

Part of the review of the National Automotive Policy (NAP) announced in October 2009 by the Government and aimed at creating a fair, liberal and transparent policy included doing away with the AP system.

A used car dealer in the Klang Valley. ‘Not everyone can afford new vehicles and many also do not want the hassle of paying a car loan,’ says a dealer.

 

Under the NAP, open APs (which allows the bumiputra holders to import any brand of car from any country) will be scrapped by Dec 31, 2015, while franchise APs (which allows holders to import specific brands and makes from its principal) will be terminated by Dec 31, 2020.

The question is whether this would actually happen. Under the first NAP in 2006, the AP system was supposed to be abolished by 2010.

No political will

However, when the time came to implement it, many believe that the Government buckled under pressure and ended up postponing the termination of the open AP and franchise AP systems to 2015 and 2020 respectively.

“The APs are said to be given away free to the (bumiputra) entrepreneurs to kick-start their businesses, but over the years, many of them ended up selling them to third parties for profit rather than importing cars for themselves,” says a local used car dealer, who wishes to remain anonymous.
At Budget 2010 two years earlier, the Government slapped a RM10,000 fee for the issuance of each open AP.

The RM10,000 charged, meanwhile, would be used by the Government to set up a fund, with the money to be used to ensure smooth and orderly shift of bumiputra entrepreneurs to other business sectors.

“The RM10,000 fee is a burden for used car dealers as it can cost between RM40,000 and RM50,000 (for us) to purchase an AP. Of course if it's a more expensive car, the (AP) cost would be higher,” says the used car dealer.

With the abolition of APs, it would be a “free-trade” system, he says. “That means that anyone would be able to import vehicles.”

A Klang Valley-based used car dealer doesn't believe that a liberalisation of the automotive industry, especially the abolition of APs, will ever happen.
He says although the abolition of the open AP system by 2015 is a good move and sounds promising, he thinks it won't happen given the strength of the lobbyists.

“How can they abolish the APs? If that were to happen, so many bumiputra business people would be affected. You can talk about it, but I don't think it will happen at least not in my lifetime!”

Proponents of APs

The Association of Malay Importers and Traders of Motor Vehicles Malaysia (Pekema) meanwhile, is hopeful that APs will be maintained.

Vice-president Sharifah Noor says bumiputra entrepreneurs that were dependent on APs would be hurt as they had invested considerable sums in the business.

She says the automotive business is its members' main income stream and a springboard for them to venture into other businesses.

“Even though our members have diversified businesses, the cash cow is still the AP business. Removing it (the AP) will affect their other businesses.

“Our members contribute a lot to the Government in terms of import and excise duties as well as sales tax.
“If you don't look after their interests, there will be some impact on the country's economy,” Sharifah says.
Earlier last year, it was reported that Pekema Sabah branch had asked for the review of the (RM10,000) levy charged on open APs to import used vehicles. Pekema Sabah had also requested the Government to review the policy to end the AP system.

Pekema Sabah chairman Rozman Isli says the levy of RM10,000 for the issuance of each open AP is a burden to members, especially during the economic slowdown.
Sharifah says Pekema has proposed to the Government to split payment of the RM10,000 levy into two parts to make it easier for its members.

“The levy has been approved and Miti (International Trade and Industry Ministry) is finalising it with the Road Transport Department,” she says.

Earlier this year, it was reported that Pekema Sarawak had urged the Government to set up the Bumiputra Economic Performance (BEP), a unit akin to the Performance Management and Delivery Unit to specifically plan, implement and monitor the economic performance of bumiputras.

The BEP is expected to be a permanent secretariat and headed by a chief executive officer with ministerial rank who reports directly to the Prime Minister, according to Pekema president Datuk Zainuddin Abdul Rahman.

The structure would allow BEP to oversee matters related to bumiputra economic agenda including overwriting the authority of certain heads of government agencies if needed.

Poser for used car dealers

For dealers of imported used parts, “D-Day” is just around the corner. Under the NAP, the importation of used parts and components will be prohibited from June 2011. Safety and environmental concerns are the main reasons for this policy.

Tan, a Penang-based used parts dealer, believes this policy will cripple the used car business.
“Thousands of players are involved in the used parts business in the country. This policy will kill us.
“But don't just think about the business owners. What about the employees? In the end, there will be hundreds of thousands of people that will be unemployed,” he says.

Tan adds that the Government should conduct a study on the impact before the policy is implemented.
“Banning used parts would also mean that if you have a year 2000 Toyota, getting new parts for an old vehicle would be difficult.”

Chang, a used parts dealer in Kuala Lumpur, says it is a misconception that used parts are less reliable than new parts.  “Cars break down every day. This can range from a new car of three months to one that's been around for a decade.”
Chang says not everyone can afford new vehicles, adding that many also do not want the hassle of paying a car loan.

“Used parts are also more affordable and contrary to popular belief, last a long time,” he says.
According to an article on insurance web portal Malaysia Insurance Online (MIO), imported used parts and components are actually cheaper than those manufactured locally. It also says imported used commercial vehicles also provide cannibalised parts for the industry.

From the insurance industry perspective, MIO says it is not uncommon for claims personnel to tweak part prices when assessing the claims quantum.
“The tweaking is to put in some second-hand or cannibalised parts as replacement for the damaged ones.
“Those used parts are important in scaling down costs for the industry to contain the ever deteriorating loss ratios.”

MIO adds that ultimately, the insured will benefit from the used parts industry.
“While the facts are such, caution should not be thrown to the wind the escalation in theft of motor vehicles is also the result of increasing demand for cheap cannibalised vehicle parts.”

END OF ARTICLE:
l

ARTICLE: The attraction of hybrids

The Star Business: Saturday March 19, 2011

The attraction of hybrids

By EUGENE MAHALINGAM
eugenicz@thestar.com.my

THE current surge in demand for hybrid vehicles in Malaysia can largely be attributed to the Government's decision to grant full excise duty exemptions on such cars below 2,000cc until year-end. This was announced during the tabling of Budget 2011 in October 2010. It gives a glimpse of what we can expect when the country's automotive sector moves towards a fully liberalised and tax free structure.

Prior to Budget 2011, the demand for hybrid vehicles has been pretty low, mainly for two reasons the relatively high purchase price and a weak understanding of and appreciation for hybrid technology.
With lower prices after excise duty waiver, public awareness of the benefits of hybrid cars has picked up considerably, and with that, sales of such cars.

Honda is getting over 2,300 bookings for its Insight hybrid car.

 

Cars that were previously off limits no longer are, and consumers have more choices when it comes to buying new vehicles.

“As cars are more of a necessity these days, overpriced cars are inhibitive for customers,” says an industry observer.

“With access to hybrid vehicles, customers have access to some of the latest technologies that other countries have long enjoyed. This is a move forward for us,” he says, adding however that the current models are still not affordable for everyone.

“It's still a bit expensive. Hopefully, national car companies in Malaysia will take up the challenge of offering hybrid vehicles that are more affordable for the masses.

“For now, I feel that only the reasonably affluent can enjoy the benefits of hybrid technology.”

UMW Toyota says it has received over 700 bookings for its Prius hybrid.

 

According to reports, national car company Proton plans to start offering hybrid vehicles within the next two years while Perodua will still continue to manufacture cars with internal combustion engines.
Other industry observers believe that the excise duty exemption on hybrid cars is like a shot in the arm to this vehicle segment.

Says Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad: “Last year 327 units of hybrid cars were sold. This year, the hybrid car sales could jump five fold based on the number of bookings received by Honda Malaysia Sdn Bhd and UMW Toyota Motor Sdn Bhd.”

UMW Toyota Motor and Honda Malaysia currently offer the Toyota Prius and Honda Insight respectively. The Prius and Insight start from RM139,900 and RM98,000 respectively.

Kavan Mukhtyar believes 2011 will be a big growth year for hybrids in Malaysia.

 

When contacted, a UMW Toyota spokesperson says it has received over 700 bookings for its Prius to date.
While Honda Malaysia says the company has received over 2,500 bookings for its Insight.

Aishah says the incentive should be extended for at least another five years (and not on a yearly basis).
“This is because short-term and ad hoc incentives will not build market acceptance and create technology awareness among consumers. It is also difficult for the industry to draw up long-term plans to evaluate the feasibility of introducing more hybrid and electric cars.”

Frost & Sullivan partner and automotive and transportation practice head for Asia-Pacific Kavan Mukhtyar believes that 2011 will certainly be a big growth year for hybrids in Malaysia.

“We expect this year's volume to be around 3,400 units. Globally it is observed that when the price difference between an internal combustion engine vehicle and a hybrid is less than 20%, then the volumes start to pick up.”

Aishah believes the hybrid segment (below 2,000cc) could see the biggest growth in terms of percentage, but not necessarily in volume.

Liberalisation for all?

For now, the Government's incentives for hybrids are limited to vehicles below 2,000cc. Luxury hybrids, a segment of vehicles above 2,000cc, were overlooked at Budget 2011 and consumers of this segment are not exempted from excise duties.

Companies offering luxury hybrid vehicles in Malaysia are Porsche distributor Sime Darby Auto Performance Sdn Bhd, which offers the Cayenne S Hybrid, and Lexus Malaysia Sdn Bhd, which currently sells three models RX450h, LS600h L and CT200h.

However, the CT200h which comes with a 1.8-litre petrol engine qualifies for the excise duty exemption under Budget 2011. The CT200h starts from RM172,603 (on-the-road, with insurance).
Frost & Sullivan Asia Pacific automotive & transportation practice consultant Ahmad Faridz Dzulkarnain believes the exemption of import and excise duties should be extended across all hybrid models regardless of engine size.

“Essentially, the promotion of hybrids should be as clinical as possible to ensure all potential hybrid car buyers can benefit from the incentives provided,” he says.
“Many potential buyers and dealers of luxury hybrid models will definitely find this move encouraging,” he adds.

An industry observer concurred that by exempting duties across the board, it could help liberalise the local automotive sector and even encourage more foreign-player participation.
“There are many foreign companies that would like to enter Malaysia because it is the largest passenger car market in Asean.

“But not many will be able to sell their products due to limitations like that for hybrids. This will deter them from coming in and force them to seek opportunities elsewhere.”
Aishah says the MAA is supportive of excise duty exemption for all hybrid vehicles.
“It should be opened to all categories of vehicles, including commercial vehicles.”

Kavan concurs: “It should not be confined to just below 2,000cc engines. The Government should include all hybrid engine sizes, green diesel technology cars, environmental friendly cars, electric and others.”
Faridz says that with duties exemption, sales of luxury hybrid vehicles would improve just a small fraction of the total hybrid sales expected in 2011.

“This is because even with the exemption, the price points of these luxury hybrids will still be on the higher end. Hence, the purchase will still be limited to high-income group.”

Currently, the on-the-road (without insurance) price of the Lexus RX450h, Lexus LS600h L and Porsche Cayenne S Hybrid starts from RM520,000, RM976,699 and RM720,000 respectively.
Faridz reckons that with the excise duty exemption, Lexus and Porsche could see a 40% to 45% reduction in the price of their hybrid offerings.

That means luxury hybrid cars would be tentatively priced at RM286,000 to RM312,000 for the Lexus RX450h, RM548,000 to RM598,000 for Lexus LS600h L and RM396,000 to RM432,000 for Porsche Cayenne S Hybrid.

For Porsche, the new pricing of Cayenne S Hybrid would make the vehicle marginally cheaper than its petrol-based Cayenne (that starts from RM550,000), which is also the company's top seller.
Faridz says this could result in potential Cayenne buyers purchasing the hybrid variant simply because it is priced lower than the other variants.

“Although these buyers may not initially intend to purchase a hybrid, but because of the attractive price points, the hybrid variant appears to be the most appealing in the product line-up.”

Lexus Malaysia could not be reached for comment. However, Sime Darby Auto Performance chief executive officer Arnt Bayer is hopeful that the Government would consider opening up the hybrid market at the next budget.

“The Government's decision to exempt excise duties on hybrids below 2,000cc is definitely a good approach to drive the green environment strategy,” he says.

However, Bayer says the target would not be met if the exemption was not given across the board because some automotive manufacturers do not have such products with engine below 2,000cc.
“Porsche tries to introduce the hybrid concept in the luxury and performance segment but it cannot benefit from the scheme,” he says, adding that the company sold about 10 Cayenne S Hybrid models last year.

 END OF ARTICLE...

 

 

ARTICLE: The road to liberalisation

The Star Business: Saturday March 19, 2011

The road to liberalisation

By JAGDEV SINGH SIDHU
jagdev@thestar.com.my

TIME is ticking and there is a lot to be done. The Malaysian automobile industry, long cradled by protectionist measures, is seeing imminent liberalisation creeping up over the horizon and there is a lot that needs to be corrected and strengthened before the car companies and vendors get set for an open environment.
“Malaysian Automobile Association (MAA) members would like to see liberalisation brought forward with certainty so that they and their principals would be able to strategise future plans,” says the association's president Datuk Aishah Ahmad.

Datuk Aishah Ahmad ... ‘MAA would like to see liberalisation brought forward with certainty.’

 

The blueprint for liberalisation has long been known. The National Automotive Policy (NAP) review in 2009 spelt out the steps that will be taken by the Government to slowly and eventually liberalise the automobile industry.

According to the schedule, the controversial import permits (APs) will be dismantled by end 2015 and franchise APs by the end of 2020. Imported used parts will be phased out in June this year and the Government recently announced it will stick to the original timeline. New conditional manufacturing licences were issued, fuel standards will be adopted and although postponed right now, a vehicle end of life policy will be introduced.

While AP holders will surely kick up a fuss on the potential loss of business, there is very little that can be done as free trade agreements have been signed between Malaysia and other countries which demand fairer market access. Malaysia has signed the regional Asean Free Trade Area (Afta), and is implementing Asean FTAs with China, Japan, Korea, India, Australia and New Zealand.

The country also has bilateral FTAs with Japan, Pakistan and New Zealand.

Given the urgency, the Malaysia Automotive Institute (MAI), an agency under the International Trade and Industry Ministry (Miti) tasked with coordinating and implementing the broad objectives of the NAP, has already set out to work.

“At the end of the day we want our automotive industry to be competitive,” says MAI chairman Datuk Kamaruddin Ismail.

Will car prices fall?

Liberalisation will likely see import tariffs for cars outside of Malaysia cut. Currently cars imported from countries in South-East Asia have zero import duties levied on them if local content requirements are met.
The general belief is that car prices should fall for cars imported from outside this region. Sadly, that may not be the case.

Mercedes-Benz Malaysia president and CEO Roland S. Folger thinks liberalisation does not necessarily mean cheaper cars or automotive products. Aishah concurs, adding that liberalisation might not lead to lower duties but will create a more competitive environment with level playing field.

“It depends on the model of liberalisation. In general going by global trends, liberalization increases the extent of competition resulting in lower prices, more models,” says Kavan Mukhtyar, Partner & Head of the Automotive & Transportation Practice Asia Pacific at Frost & Sullivan.

“As prices are lowered, the sales volume will witness a healthy growth. However liberalisation should be timed according to the priorities of the nation. Too rapid a liberalisation can potentially have an adverse impact on industries and local employment.”

Opening up the field

The scenario being painted is that when full liberalisation takes place, the marketplace would be different than today. Access to Malaysia from foreign car companies, especially from the free trade agreements signed with Japan, South Korea and China which will kick in at the latest in 2018, will see equal treatment accorded to cars imported from Southeast Asia.

“Governments around the world want to benefit from the opportunities arising from this trend. However every free trade agreement could present several challenges for certain industries in the home market,” says Mukhtyar.

“In the Malaysian context, the automotive industry will face stiff competition from liberalisation. The benefits may be greater foreign direct investments. I am sure the Government will carefully consider the benefits versus challenges from liberalisation while planning the timelines.”

One example where a country has benefited from liberalisation has been Thailand.

In the past, detractors have said Thailand relies too much on foreign input, has no indigenous automotive technology and their industry represents a “screwdriver assembly” and not pure manufacturing.
Since then, the scepticism has waned as more sophisticated and large scale manufacturing has taken place in Thailand, boosting its economy through job creation and export earnings.

While Thailand has leaped forward in growing its automobile manufacturing base, Malaysia's has somewhat stagnated as domestic production from the national makes, although rising, is no where near that of Thailand.
Even so, it may not be too late for Malaysia.

Years of nurturing home-grown talent has paid off in some ways and for DRB-HICOM Bhd, its CFO Datuk Lukman Ibrahim believes there is a rush to get as many foreign car companies to establish operations in Malaysia before 2015 as possible.

“We should accelerate and capture as many companies as possible into Malaysia,” he says.
“And we should open up in giving manufacturing licences now instead of later.”
That urgency might be a reason why DRB-HICOM decided to rope in Volkswagen as a partner in its upcoming assembly operations in Malaysia. The entry of big names into Malaysia which are not already established in South-East Asia is a coup for Malaysia.

“Objective of liberalisation is to make Malaysian car companies more competitive not only in Malaysia but also in the international arena,” says Aishah.

“Companies have to be prepared and move towards stiffer competition. Only those who can take the global onslaught will survive.”

The tale of two national carmakers

No doubt about it - Proton and Perodua need to get set for rising competition.
Towards this end, a merger of these two companies that would result in the scale and strength plus the entry of a Japanese foreign partner in Daihatsu and Toyota has been mooted. However, those plans have been shelved with the Government less keen to do a forced merger.

But the impact on these companies, which currently command a market share of 60% in passenger cars, would be tremendous.

Principals of non national car players would most likely rationalise their CKD operations in Malaysia vis-a-vis their production bases, particularly, in neighbouring countries.

As it will be a huge game changer for the national makes, the MAI has asked Proton and Perodua to provide details on the companies' gameplan in a more open environment.
“They have a target of 2015 to reduce cost by a certain percentage and to improve quality,” says MAI CEO Madani Sahari.

“For full realisation of the potential benefits that market liberalisation has to offer, timing is of essence and it should be based on the readiness of the domestic economic sectors, automotive including, to face the challenges that market liberalisation will bring to bear,” says Proton in a response to queries from StarBizWeek.

“It is essential that the Government develop a roadmap on domestic market liberalisation to enable all relevant stakeholders along with the whole value chain, which include manufacturers, assemblers, dealers and vendors to be aware of the measures to be undertaken by the Government.”

The potential downside

There are also dangers of liberalisation for the domestic players. One example is Australia where the dismantling of protectionist measures has seen one domestic player fold and the short-term pains were quite severe for the industry.

Proton believes that could be avoided if there is proper planning, without which the consequences for Malaysia too will be economically dire.

“History has shown in many instances where once dominant domestic economic sectors went into oblivion with its place taken by foreign businesses due to the wrong timing of market liberalisation, albeit with clear and good intentions,” it says.

“All the efforts of the Government to develop and promote the domestic automotive industry thus far would be in vain.”
Engaged in discussion with the Government as to how to prepare for full liberalisation, Proton too thinks full liberalisation will see more foreign makes set up shop in Malaysia and that will help create economies of scale and eventually aid the vendors.

“Companies such as Proton would benefit from higher quality and cheaper components due to cost reductions of local vendors as a result of greater economies of scale provided by the foreign OEMs,” it says.

The race 

Two imperatives - cost needs to come down and scale bumped up. With demand for cars expected to rise substantially in Southeast Asia in the next 10 years, more production capacity will need to be planted in this region.

“All companies in the automotive industry in Malaysia need to focus heavily on building competitiveness. Key areas of focus would be to reduce cost, obtain economies of scale through exports, build product development capabilities,” says Mukhtyar.

To lower costs, the vendor system in Malaysia needs to become more competitive.
Proton says part of its roadmap is to create growth via its export programme, in which its vendors will play a crucial role.

“To enable us to compete successfully in the overseas market, we need the support and the versatility of our vendors as a significant part of the costs of the car is attributed to component costs,” says Proton.
“Versatility in terms of cost competitiveness, quality and technological depth are critical in supporting Proton to achieve its objectives as outlines in our roadmap.”

Vendors might feel that its not getting the support of scale from the domestic car makes to be more competitive. For one, local production is growing slowly and not all vendors are in the pink of financial health. Secondly, rebadging activity conducted by Proton might not see local vendors get the type of business like a car designed and manufactured by Proton.

Furthermore, should export programmes lead to the outsourcing of component production offshore Malaysia to a company in a foreign land, like what is happening in China, then vendors fear components made there might come back into Malaysia and compete with the parts made here.
That would be, in a nutshell, counter productive.

END OF ARTICLE...

Customers assured of cars and parts despite Japan quake

The Star Business: Monday, March 14, 2011

Customers assured of cars and parts despite Japan quake


SOURCE: http://www.star-motoring.com/News/2011/Customers-are-assured-of-cars-and-parts.aspx

The companies are UMW Toyota Motor, Honda Malaysia, Edaran Tan Chong Motor which distributes Nissan vehicles and Perodua whose technical and technology partner is Daihatsu Motor Company of Japan.

UMW Toyota Motor said its Malaysian customers would not encounter any interruption to the supply of Toyota and Lexus models as sales and order taking would continue as usual.

Delivery schedules to all customers are not affected presently.

Toyota Motor Corp has temporarily suspended production at all plants Monday, March 14 until Wednesday, March 16.

Edaran Tan Chong Motor executive director Datuk Dr Ang Bon Beng said there were no immediate negative impact to the company’s business as there were sufficient inventories for both CKD and CBU models.

Nissan of Japan has temporarily suspended operations of all production facilities in Japan until March 16.

The Japanese company has also pledged to donate 30 million yen (RM1.11mil) to the NGO Japan Platform as initial assistance.

Honda Malaysia said supply of Honda models to Malaysia was normal.

Honda Malaysia managing director and CEO Yoichiro Ueno said, "Our inventory for the four CKD models of Accord, CR-V, Civic, City, and the other four CBU models in Malaysia is sufficient for the next one to two months.

"We are monitoring the situation closely and will make the relevant announcement when we have more information."

Honda Japan has suspended production at all its major plants for a week from March 14 in support of the nationwide recovery efforts.

Meanwhile, Perodua managing director Datuk Aminar Rashid Salleh said the devastating tsunami and earthquake in Japan has not affected Perodua’s engine components imports from the country nor cause any disruption to its manufacturing plans domestically.

He said between 10% and 20% of engine parts from Japan were used in three Perodua models – the Myvi, ViVA and Alza.

“Our hearts and sympathies go out to the victims and families of this tragedy. To express our heartfelt sympathy Perodua will be donating RM50,000 to the Japanese government through their embassy in Kuala Lumpur,” he said.
 

The Star Business: SOURCE

Tuesday January 11, 2011

Proton in talks to assemble vehicles in India

By EUGENE MAHALINGAM eugenicz@thestar.com.my

PETALING JAYA: Proton Holdings Bhd has not ruled out the possibility that it is in talks with Indian automobile manufacturer Hindustan Motors to assemble its vehicles for the Indian market.
“We are in talks with several parties in India. Right now, it's still too early to comment,” group managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir told StarBiz yesterday.

He was responding to a report by The Times of India that Proton was close to tying up with Hindustan Motors for a contract manufacturing agreement to assemble its cars for the Indian market.
When asked if Hindustan Motors was one of the parties that Proton was in talks with, Syed Zainal said: “I think that can be implied.”

Hindustan Motors is known for its Ambassador car that is widely used as a taxi and government limousine.
In its report on Saturday, the Indian English-language daily reported that Proton was close to tying up with Hindustan Motors, adding that a decision was likely to be announced by end-February.

The report said Proton was in favour of using Hindustan Motors' Chennai plant, set up for assembling the Mitsubishi Lancer, to locally produce its Exora multi-purpose vehicle.

“Top Proton executives have visited the Chennai plant of Hindustan Motors on several occasions in the past three months.

“According to top sources in the Chennai component industry, Proton is interested in sourcing engine and transmission systems from Hindustan Motors' group company Avtec,” The Times of India reported.
Last week, Syed Zainal announced that Proton was looking at offering the Saga, Persona, Exora and Emas hybrid models in India.

He said the national carmaker would do so by tapping the experience of an Indian original equipment manufacturer that already had a plant and was assembling its own vehicles.  Syed Zainal said that an announcement on this would be made by this quarter.

END OF ARTICLE...

ARTICLE: Increase in demand for hybrid cars

The Star Business, Thursday December 30, 2010

Increase in demand for hybrid cars

By EUGENE MAHALINGAM
eugenicz@thestar.com.my

PETALING JAYA: Honda Malaysia Sdn Bhd and UMW Toyota Motor Sdn Bhd have already recorded combined bookings of nearly 1,500 units for their Honda Insight and Toyota Prius hybrid models respectively in the span of less than three months.

The bookings, if they were to materialise into sales, would represent a significant jump compared with just the 297 total hybrid units sold in the whole of 2009.

The spike in demand for hybrids has been fuelled primarily by the Government's decision under Budget 2011 to grant full excise duty exemptions on hybrid cars below 2,000cc until Dec 31, 2011.

A representative from UMW Toyota said the company had received over 470 bookings for the Prius since the Government's budget announcement on Oct 15, while a spokesperson from Honda Malaysia said it had received 946 bookings for the Insight since the vehicle was launched at the Kuala Lumpur International Motor Show (KLIMS) earlier this month.

At RM98,000, the Honda Insight is the cheapest hybrid car.

 

“We are expecting bookings to hit 1,000 units by the end of the month,” said the spokesman from Honda, adding that the company had discontinued selling the Honda Civic Hybrid to focus on the Insight instead.
“We have stopped importing the Civic Hybrid but even the stock that we have has already been taken up.”
According to the spokesman, Honda Malaysia will continue to service and provide spare parts for the Civic Hybrid. In total, the company has sold 376 units of the Civic Hybrid, of which 18 units are its first generation (2003) model.

At RM98,000, the Insight is the cheapest hybrid. Honda Malaysia is targeting to sell 4,000 units of the Insight by the end of 2011.

An analyst from a local research house said the spike in demand for hybrid cars like the Insight reflected the public's need for fuel efficient cars at affordable prices.

“The car is not only cheaper but provides good fuel economy as well,” he said.

On its website, Honda Malaysia said delivery of the Insight would begin in February.
 
Prior to the Government's Budget announcement, the Civic Hybrid and Prius cost RM129,000 and RM175,000 respectively. The latter now costs RM139,900.  A representative from UMW Toyota said the company had sold a total of 250 units of the Prius as of November 2010.

OSK Research auto analyst Ahmad Maghfur Usman said the rise in demand for the Insight could have an impact on sales of other petrol-based vehicles that were within the same price range.

“I think it would affect sales of vehicles like the Toyota Vios and Honda City. People would not mind forking out a bit more money to buy a hybrid.”  The on-the-road with insurance price of the Vios ranges from RM70,783 to RM90,819 while the City starts from RM85,480.

“I think sales of Perodua vehicles would not be affected as these cars are much cheaper,” said Maghfur.
According to reports, national carmaker Proton also has plans to launch a hybrid model of its own, most likely the Exora multi-purpose vehicle, next year.

Analysts were however non-committal on whether the Government may consider re-imposing excise duties on hybrid cars if Proton were to launch its own hybrid vehicle.

One industry observer said re-imposing excise duties on hybrid cars would only “set the local automotive industry back further.”

“The removal of excise duties helps to bring down the price of cars, boost competition and provide long-term benefits to the domestic industry. Furthermore, the more liberalised the local environment, the more it would encourage foreign participation and investment.

“If anything, it (the excise duty exemption) should be extended for a longer period and not on a yearly basis. This would attract foreign players that want to invest in our country for the long term,” he said.

At a press conference at KLIMS earlier this month, Perodua managing director Datuk Aminar Rashid Salleh said the national compact-carmaker had no immediate plans to produce hybrid vehicles of its own.
He said there was still “a lot of life left” for vehicles with internal combustion engines.

END OF ARTICLE...

SOURCE: http://biz.thestar.com.my/news/story.asp?file=/2010/12/30/business/7702950&sec=business


That's all folks, thanks for having the time and patience to read this blog entry...

Mahindra to buy Ssangyong...

The Star Business: Tuesday November 23, 2010 MYT 11:45:00 AM

India's Mahindra signs US$463mil deal to buy Korean Ssangyong

SEOUL, South Korea: Mahindra & Mahindra Ltd. and Ssangyong Motor Co. say they have signed an agreement for the Indian company to acquire the South Korean automaker for $463 million in new shares and debt.
The two companies announced the deal Tuesday after India's Mahindra & Mahindra was named the preferred bidder for Ssangyong in August.
They said in a statement that sport-utility vehicle maker Mahindra will take a 70 percent stake in Ssangyong. The companies said they expect the deal to be completed in March 2011.
SUV-maker Ssangyong went into court-approved bankruptcy protection early last year amid falling sales and mounting red ink. It was majority-owned by SAIC Motor Corp. until the Chinese company lost management control during the bankruptcy process. - AP

For Another perspective from The Korea Herald, a partner of Asia News Network, click here
Latest business news from AP-Wire

ARTICLE: Revving it up

The Star: Saturday November 6, 2010

Revving it up

By JAGDEV SINGH SIDHU
jagdev@thestar.com.my

New vehicle sales may hit a record this year but key issues remain unresolved

The country’s car industry is poised for record sales this year and with the changes brought about by the revision of the National Automotive Policy to set the industry on liberalised mode, the pace is set to quicken.
Galvanising the industry further are the fresh moves to abolish taxes and excise duties for hybrid and electric cars and motorcycles to push the green agenda on high gear.

Even so, there are many other key developments set to emerge on the forefront which could further alter the industry landscape. They include the government-led initiative for a Proton-Perodua merger, the issuance of more manufacturing licences in the country and the much-hyped about entry of Volkswagen to assemble cars in Malaysia.

Meanwhile, auto players are basking in the possibility of seeing a record year in terms of new vehicle sales.
“The main reason for this growth in sales is a result of the strong economy in Malaysia, which emerged from a “V” shaped recovery,’’ says UMW Toyota Motor president Kuah Kock Heng.

Naza Group’s SM Nasarudin says the new licences will boost competition.

 

“New model offerings, reasonable interest rates that make car ownership relatively affordable and a young population with a strong desire to own a car – all these factors combine will make 2010 a record breaking year,” says Kuah.

According to Frost & Sullivan consultant Ahmad Faridz Dzulkarnain, growth in the first half of this year was largely driven by strong sales of MPVs (multi-purpose vehicles).
In this segment, the big numbers came from Perodua Alza and the Proton Exora which has led to a rise of 80% sales year-on-year.

Ahmad expects the growth rate to maintained for the remaining months of 2010, albeit at a slower rate compared to the first half of the year.

The supporting factors for rising sales include the launch of Proton Inspira this month, year-end festivity and the price reduction of hybrid vehicles.

“Moving forward, we hope consumers look for vehicles that are both more cost efficient as well as environmentally conscious. Awareness of the capabilities of automotive technologies today and the need to take pre-emptive steps to address global challenges such as sustainability will become more prevalent,” says BMW Group Malaysia managing director Geoffrey Briscoe.

MAA’s Aishah ... ‘Fuel quality should keep up with global trends.’

 

Budget 2011 which was unveiled not too long ago had included the abolishment of taxes for hybrid and electric cars for one year from a tax cut in the previous budget. Still, this is too short a period, says Malaysian Automobile Association president Datuk Aishah Ahmad.

“The validity duration should be at least 3 years for better business planning purpose,” she opines, addings that the incentives should not be limited to certain engine capacity only (2.0 litre and below).

“It should be given to all engine size.”

New auto licences

A key development that could potentially alter the industry landscape further is the awarding of new manufacturing licences issued by the International Trade and Industry Ministry.

As it stands now, Berjaya group has received a licence to manufacture commercial vehicles, hybrid cars, electric cars and luxury passenger vehicles in Malaysia.

UMW’s Kuah says Malaysia needs to do more to develop the component makers.

 

Although the licence does not grant Berjaya the permit to make cars under 1,800cc and below RM150,000 per unit, which represents a huge segment, it still is a milestone for the company.
Following this, Berjaya, which currently contracts out the assembly of vehicles, will now be allowed to conduct assembly on its own in a single plant. This will enable it to reduce costs through higher economies of scale in the long run.

In line with this, the company plans to assemble other makes of Mazda, beyond the Mazda 3, throwing in commercial vehicles into the mix as well.

The new licence is a signal that the Government is open to allowing more players in the commercial vehicle market, which Aishah says will heighten competition as brands from China would likely make inroads into the Malaysian market.

“There could be some rationalisation of existing assembly plants producing commercial vehicles in terms of production mix between commercial and passenger vehicles,” she says.

Protectionist – or not?

While many deem the government’s reluctance to allow car makers to penetrate into the national car segment as protectionist, Naza Group of Companies Joint Group executive chairman SM Nasarudin SM Nasimuddin still believes the new licences will enhance competition among the existing players, ultimately benefiting the industry and consumers.

Briscoe echoes this sentiment: “The introduction of new manufacturer’s licences will inevitably encourage greater investment into the Malaysian car industry by foreign producers and also aid in developing a more competitive industry, both of which are likely to have significant benefits to the Malaysian consumer.”
But market observers are not jumping to such conclusions – just yet at least.

They say for global car makers to be drawn into the Malaysian market, they will first need to assess if there is sufficient volume to justify committing considerable sums to build a full-fledged manufacturing plant in the country.

Without the right to dip into the segment long ring-fenced for the national car makers, which still accounts for the lion’s share of the market, the case for volume could be a little harder to make.

Lest we forget, neighbour Thailand has long been benefiting from the protectionist policies of Malaysia to grow their own car industry which includes component makers.

Any policy measures in Malaysia to woo foreign car makers will be benchmarked against the successful steps Thailand has taken thus far towards that end.

Even though the new licences may not allow new competition in the below 1,800cc segment, assemblers in the country have already ramped up their CKD (completely knocked down) operations in the country in accordance with the tax reduction brought about by the revision of the NAP.

Still, Kuah says the market for vehicles with an engine capacity greater than 1,800cc remains small as in 2009, it was only 6% or 23,178 units of 407,005 cars sold.

“Therefore, if there is an increase in the number of players for 1,800cc and above vehicle, it will be very crowded. Even today, there are far more active players than compared to five years ago,” he says.

Gearing up for green

Despite the limitations of any manufacturing licence in the country, Ahmad says the presence of new players will no doubt provide long-term benefits to the industry.

He says new manufacturers will offer consumers choice and existing players need to remain competitive to deliver better products to consumers.

“Consumers will also be able to purchase locally-assembled hybrids, electric cars and luxury segment vehicles at relatively cheaper prices – hence better penetration rate of these segments are expected,” he says.
For the industry and country, the new licences will be basically for green vehicles and commercial vehicles which could lead to increased sales and investments by the industry.

The industry is still new and this segment would also see direct competition from Thailand which has its own eco-car development. Toyota will be assembling its best selling Prius in Thailand from this month due to the strong yen.

Just never enough

While the granting of licences is a first step, market participants feel more is needed to liberalise the sector to woo investments into the country.

“We certainly need to have policies that can compete with our neighbours in terms of attracting new investments. As the largest passenger car market in the region, we have a very attractive market and if our policies are competitive, we will see more investments coming in,” says Nasarudin.

Edaran Tan Chong Motor Sdn Bhd executive director Datuk Dr Ang Bon Beng says the industry cannot depend on domestic market alone to achieve strong growth.  “It is imperative to have a level playing ground for all auto players where survival and success are based on competitive edge, in order to prepare one for regional expansion,” he adds.

Market observers say the industry, which saw existing companies increase assembly of cars in the country from lower taxes imposed on CKD operations, would be open to even more cars coming from Japan and Korea from 2015 onwards once Free Trade Agreements between Malaysia and Asean come into effect in the future.

Aishah says that in the absence of a level playing field in Malaysia, global automotive players have been making their presence felt though contract assembly of their models in Malaysia, shying away instead from direct investments.

“Inconsistent policies have created fear among automotive players on whether or not to invest in Malaysia,” she says.

Case for component makers

Another outstanding issue is the competitiveness of the local component makers.

Calls have been made to develop the Tier 1 vendors to have them innovate and plough in more resources into research and development to create a more vibrant supply chain.

Due to a lack of scale, a number of the component makers in Malaysia are basically still nut and bolt assembly companies, importing the components and assembling them for car companies in Malaysia.
“Presently, not many first-tier suppliers can compete on a global scale. Malaysia needs to do more to further develop the first-tier, second- and third-tier parts components suppliers,” says Kuah.

He says within the Asean region, Thailand has a larger automotive base for parts components manufacturing, and hence, enjoys greater economies of scale.
“The challenges facing the local automotive parts components manufacturers is cost competitiveness, apart from quality and access to latest technologies,” says Kuah.

One component maker claims that protectionist policies have resulted in components from Malaysia attracting higher import duties into countries in South-East Asia.

One way for components makers to up the ante is by forging Technical Assistance Agreements (TAA) with leading global OEM companies to enable them to access design capabilities, best practices in production and quality control.

“The government should consider providing incentives to Malaysian companies to enter into such agreements,” he says, adding that UMW Toyota Motor Sdn Bhd (UMWT) is aiming to export more than RM1bil worth of automotive parts components to Toyota affiliates worldwide. It is a 43% increase over the more than RM700mil the company earned in 2009.

Another perennial issue is the high cost of vehicle ownership in the country, no thanks to high taxes. Such taxes may be a significant source of Government revenue but they remain a sticky issue, one that has also made things difficult for policies such as the vehicle end of life due to the high cost to buy cars.

Fuelling the situation

The poor quality of fuel in Malaysia is another touchy subject.

Energy companies say offering higher quality fuel involves higher costs which ought to be recouped through a small increase in fuel cost to end users.  Opponents of the passing the buck argument say legislation should be sufficient to compel companies to provide better quality fuel without having to burden the consumer.

For one, Nasarudin hopes for higher grade fuels, especially diesel, in the near future: “Global carmakers have stepped up efforts to develop new highly fuel efficient models that run on EURO IV or V diesel and by 2014, EURO VI will be introduced.

“These cars will greatly reduce fuel consumption and CO2 emissions, which need to taken seriously.”
Briscoe laments that for far too long, Malaysian automotive users have been compelled to utilise substandard fuels, even compared to their neighbours in the Asean region.

“Lower grade fuels leads to higher emissions of harmful gasses, not to mention cause higher wear and tear on engine components. With the government committed to reducing carbon emission intensity per gross domestic product (GDP) by 40% to 2005 levels by the year 2020, the adoption of Euro IV standards is a vital step in ensuring effective widespread reductions from throughout the passenger and commercial vehicle segments,” he says.

“The quality of our fuel in our country, particularly diesel, also ought to keep up with the latest global trends,” says Aishah.
“Otherwise it will hamper the car companies from introducing the latest design and technologies into Malaysia.
In addition our country may end up a dumping ground for cars with obsolete technologies and old designs.”

The BIG merger

The merger between Proton and Perodua is no longer a matter of if, but simply when.

But not all are for the marriage. Its detractors say a merger could be a setback for the industry as it would only benefit Proton. One analyst is concerned that with the merger, Perodua’s historically high return to shareholders could suffer a beating.

Naturally, not all agree. “I don’t think consumers care. If Daihatsu remains in the picture, then there is no difference to them,” says an auto player. “This deal depends on what Daihatsu would do.”

Related Stories:

Proton MD’s vehicle end-of-life policy proposal received a lot of brickbats

Used car sellers hit by margin squeeze

2010 car sales performance in major Asean markets

Rebadging – a step forward or back?

Calls for faster liberalisation

END OF A WELL WRITTEN ARTICLE:

That's all folks, thanks for having the time and patience to read this blog entry.

The Star: Used car sellers hit by margin squeeze

The Star Business: Saturday November 6, 2010

Used car sellers hit by margin squeeze

THE local automotive industry may be on an up and up this year in terms of total industry volume, but many used car dealers feel that margins are being squeezed due to increasing competition.

“There are already too many cars and models in town. If you look at the average classified advertisement for used cars, there are more sellers than buyers,” says a Kuala Lumpur-based used car dealer.

Tan, a Kuala Lumpur-based used car dealer concurs, says that with new players coming into the market, there would be more vehicles in the market and competition among used car dealers or grey importers would be more intense.

Early last month, the Government said it was evaluating the possibility of granting manufacturing licences to five foreign automotive assemblers with the view of allowing them to operate locally, and would make a decision by year-end.

The Government already granted a manufacturing licence to Berjaya Corp Bhd, which is keen to assemble one-litre right-hand drive cars in Malaysia with China-based BYD Auto Co Ltd.
Grey importers bring in both new or used motor vehicles and motorcycles legally from another country through channels other than the maker’s official distribution system.

“Competition is already tough and will only get stiffer next year. With locally assembled cars, prices will be cheaper and a lot of customers, if given a choice, would prefer to buy a new vehicle than an old one.”
Chong, a Klang Valley-based used car dealer says sales this year had been relatively flat compared with 2009.

“Sales for the remaining months of the year are expected to be slow as customers prefer to wait for the new year so they can gain better resale value for their new cars.”

Separately, although he says the abolishment of the open approved permit (AP) system by 2015 is a good move, he feels that it still might not happen.

Under the reviewed National Automotive Policy (NAP) announced late October last year, the open AP policy to import used vehicles will be scrapped by Dec 31, 2015.

Franchise APs, meanwhile, will be terminated by Dec 31, 2020.
“I feel it’s still a question mark and will carry on,” says Chong.

During Budget 2010 last year, the Government also proposed that open APs no longer be sold for a measly few ringgit, instead slapping a RM10,000 fee for such a document. “The RM10,000-fee is a burden on used car dealers as it costs about RM50,000 for an AP. If it’s a high-end car, it could cost more,” he says.

Lam, a used-car dealer from Perak, is also looking forward to APs being abolished but is skeptical.
“Cars in Malaysia are ridiculously expensive and it’s time that APs be abolished. But will it happen? I’ll believe it when I see it.”

The Association of Malay Importers and Traders of Motor Vehicles Malaysia (Pekema) is, however, hopeful that APs are maintained.  Vice-president Sharifah Noor says auto players dependent on APs will be hurt as they had invested considerable sums in the business.

“Abolishing the APs will definitely have an impact on our members,” she says, adding that the AP system has helped create many bumiputra entrepreneurs in the automotive business.  “The automotive business is our members’ main income stream and a springboard for them to venture into other businesses.”

Earlier this year, it was reported that Pekema Sabah branch had asked for the review of the (RM10,000) levy charged on open APs to import used vehicles.  Pekema Sabah had also requested the Government review the policy to end the AP system.

Pekema Sabah chairman Rozman Isli was quoted as saying that the levy of RM10,000 for the issuance of each open AP is a burden to members, especially during the economic slowdown.  Sharifah says Pekema is currently in talks with the Government to split payment of the RM10,000 levy into two parts to make it easier for its members.

“It’s still being finalised,” she says.

END OF ARTICLE.

That's all folks, thanks for having the time and patience to read this blog entry.

SOURCE:
http://biz.thestar.com.my/news/story.asp?file=/2010/11/6/business/7341035&sec=business

The Star Business, Saturday November 6, 2010

Rebadging – a step forward or back?

By EUGENE MAHALINGAM
eugenicz@thestar.com.my

NEXT week (Nov 10), national carmaker Proton Holdings Bhd will be launching the Inspira, which is essentially a rebadged Mitsubishi Lancer GT sedan, with some minor differences.

No doubt many are excited about the new model launch. According to a report by a local news wire, Proton had already received over 1,000 bookings for the car as at Oct 25.

However, some industry observers have criticised Proton for choosing to rebadge or go with a platform-sharing approach rather than introduce a completely brand new car into the market.

This isn’t the first time that the national car company is launching a rebadged model. As many would recall, the original Proton Saga that was launched in 1985 was based on the 1983 Mitsubishi Lancer Fiore.
Fast forward 25 years and Proton is still incorporating the same strategy. But after all this time, is it a step backwards?

An industry observer says the rebadging route is a unique way for car manufacturers that want to launch a brand new car but at the same time save costs on research and development (R&D).

“It’s a shortcut to the latest technology and design,” he says.

The Inspira is a collaboration between Proton and Mitsubishi Motor Corp (MMC) of Japan. At the soft launch of the Inspira last month, Proton group managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir said it would cost Proton as much as RM700mil to develop a new car from the ground up but only half the amount via its collaboration with MMC.

Apart from cutting down on R&D costs, Proton also gets to sell the car at a much lower price. Says an analyst from a bank-backed brokerage: “It will be a big boost for Malaysians as they not only pay for a cheaper car but also get access to the latest technology.” The Proton Inspira will have a tentative starting price of RM79,888. The Mitsubishi Lancer GT, meanwhile, starts from RM120,980.

“It’s a D-segment vehicle with a C-segment price tag. Customers that couldn’t afford the vehicle previously can do so now,” says the analyst.

“The automotive industry is a volume-based game. As long as you can sell your cars, it doesn’t matter whether the vehicle is a rebadge of another product,” he adds.

Apart from this, platform sharing also means better inventory management for Proton.

“With fewer disparate components, inventory management becomes easier and more cost-efficient, allowing for resources to be freed up and used to improve products,” says the analyst.

“This also allows car manufacturers to reduce their product development and changeover duration.”
The rebadging route obviously benefits Proton, but what about MMC?

Another industry observer says that the platform-sharing concept involves purchasing rights and therefore benefits both parties.

“The company that provides the rights to use its products and technology not only gets monetary gains, but it also affirms that company’s position as a reputable car manufacturer.
“In the future, other vehicle manufacturers that are looking to rebadge will look to companies that have had successful collaborations (with other car companies) in the past.”

Companies providing their technology through platform-sharing can also now penetrate new segments that they weren’t present previously.

Examples of successful platform-sharing models include Malaysia’s own Perusahaan Otomobil Kedua Sdn Bhd’s (Perodua) Kancil, which was essentially a rebadged third generation Daihatsu Mira.
On the global front, platform-sharing examples include Peugeot and Citroen that rebadge the Mitsubishi Outlander as their 4007 and C-Crosser sports utility vehicles respectively.

However, the platform-sharing strategy also does have its drawbacks. Rebadging can result in product dilution, says one analyst. He says that if platform-sharing is widespread in many models, there will be a tendency by customers to perceive that all the products are the same.

“On one hand, this means that expensive models can be perceived to be cheaper (the Mitsubishi Lancer could be associated with Proton’s range of cheaper cars).

“On the other hand, platform sharing could increase the price of cheaper cars (due to the usage of newer and modern technology not found in similar models).”

The widespread usage of components in many models through platform-sharing also means that there is a greater chance for vehicle recall if there is a defect in a particular (widespread) component, he says.

PROTON : [Stock Watch] [News] Related Stories:

Proton MD’s vehicle end-of-life policy proposal received a lot of brickbats

Used car sellers hit by margin squeeze

2010 car sales performance in major Asean markets

Revving it up

Calls for faster liberalisation

END OF ARTICLE. That's all folks, thanks for having the time and patience to read this blog entry.