Veteran motoring writer Yamin Vong said the country should ride on foreign carmakers who have invested in Malaysia as a springboard into the Asean market, such as European giant Peugeot and South Korea’s Kia Motors.
He said the Zhejiang-Geely partnership with Proton is a rewarding tie-up which could be one way forward to fulfil Malaysia’s ambition if equity ownership conditions are relaxed to allow majority control by the technology owner.
“China liberalised its foreign equity conditions for foreign automakers in 2018. Within a year, Elon Musk had decided to establish a 100%-owned subsidiary to manufacture Tesla electric cars in Shanghai,” he told FMT.
Likewise, Putrajaya should take another look at the National Automotive Policy, the proposed revival of another national car project. Given the right incentives, transparency and dismantling of the National Automotive Policy’s restrictive conditions, foreign carmakers would want to invest in Malaysia as their Asean hub, he said.
Proton’s strategic partnership with Zhejiang Geely Holding Group (Geely) in 2017 led to the Chinese company acquiring a 49.9% stake in the national carmaker.
Last month, Proton spread its wings, penetrating the market in Kenya, Pakistan, Brunei, Bangladesh and Egypt.
The company said exports had increased by 49.8% in volume despite global restrictions caused by the Covid-19 pandemic, although the Malaysian automotive industry is expected to contract by an estimated 13%.
Yamin said demand for Proton-Geely’s new SUV almost doubled from the initial projection, with the flagship model of the vehicle fully booked until August.
“The earlier ship may have sailed, but we still have the opportunity to become a hub for European and Chinese brands and for new energy carmakers,” he said.
“Proton and Geely are not cost competitive in the Asean market where Japan’s carmakers and their affiliated vendors dominate in Indonesia and Thailand. That’s where the country needs to clearly communicate existing incentives like pioneer status and don’t confuse investors with things like customised incentives,” he said.
He said protectionist policies had arrested competitiveness with Thailand initially, and now regionally.
“There’s a lot of value in the automotive industry. In Japan, the auto market is the leading industry in terms of employment with about 5 million direct and indirect employees.
“There’s the new energy car market where electric vehicles are disrupting the old playing field. We need to change the NAP or we get further left out of a new global industry.”
Yamin said the new global auto industry is all about digitalisation. “Ironically, the NAP recognises the potential disruption but beyond that, the policy and its roadmaps are more visions than reality.”
Geoffrey Williams, an economist at Malaysia University of Science and Technology, said that foreign carmakers have looked to Indonesia not only to build cars, but also batteries and other parts.
Malaysia should consider a pivot into the parts market and while it may find some scope for exports, it was not without issues such as poor scale of economies and quality issues in the supply chain.
“But there are blue oceans out there through a focus on market tiers particularly looking at markets underserved by big players or emerging markets where incomes don’t quite cover more expensive existing brands,” he said referring to a popular marketing theory.
Williams said there were very large customer segments in emerging economies shifting to higher motorcar use and away from motorcycles as incomes rise, not unlike where Malaysia was 20 years ago.
He said the new models from Malaysia are actually quite attractive and value for money. Demand, he said, can be found in unexplored markets.
“They key is value innovation which means maintaining quality and keeping price down at the same time. There is still a long way to go before existing model types are made obsolete by fully electric models.”
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