Saturday August 11, 2012
Honda’s investment lifts auto sector
By CHOONG EN HAN
WHO'S next? That is one question that set tongues wagging recently in the local automotive industry. Following Honda Malaysia Sdn Bhd's RM1bil plans to build a new production line and improve its infrastructure and dealers network, many are wondering whether there would be other takers to pursue the manufacturing of energy efficient vehicles (EEV) in Malaysia.
Spurred on by the major impact of the Thai floods, Honda Malaysia jumped the gun and plonked in its investment to manufacture hybrid vehicles even before the announcement of the reviewed National Automotive Policy (NAP).
While Honda Malaysia has made its mark as the first non-national automotive manufacturer to produce hybrid vehicles in the country, the attention is now on UMW Holdings Bhd, which manufactures and markets Toyota vehicles and Lexus vehicles via UMW Toyota Motor Sdn Bhd.
UMW by far has the largest market share of the local industry with its 48.5% domination of the local passenger car market.
Beside its Toyota business, UMW is also the single largest shareholder of Perusahaan Otomobil Kedua Sdn Bhd, the leading volume seller in the country. UMW sold 67,635 vehicles combined for the first quarter, about half of the 138,500 total industry volume.
When contacted by StarBizWeek, UMW Toyota says it will continue to develop Toyota hybrid and technology in Malaysia and promote hybrid benefits and awareness to the public.
“We are very much committed to play an important role in offering green technology vehicles and quality products to our customers. Our principal in Japan is now looking at its long term global strategy plans and Malaysia is in it,” it says.
It adds that it fully supports the Government's initiative to make Malaysia an EEV hub in this region and support plans for hybrid local assembly.
Now, all eyes are on the revised NAP, which is touted to ensure that the local automotive industry achieve competitiveness, and to position Malaysia as the leader in the EEV segment by 2015.
EEVs encompass a wide scope of vehicles that would meet a set of defined specifications in terms of emission levels and energy usage including fuel-efficient vehicles, hybrid, electric vehicles and alternatively fuelled vehicles such as compressed natural gas, liquefied petroleum gas, biodiesel, ethanol, hydrogen and fuel cell.
However, industry sources are sceptical despite looking at the NAP with a mildly optimistic view, as the previous review of the NAP had failed to live up to what it had set out to do.
Reviewed in 2006 and 2009, the NAP had been widely scrutinised by industry observers and experts for not detailing guidelines and strategies of what it had initially set out to achieve, which is to turn Malaysia into a regional player, if not a global automotive hub.
“This is an opportunity for the Government to buck up. It is known that the local automotive industry needs the extra push from foreign stakeholders to take the industry further. Proton and Perodua just don't have the scale to compete with other global original equipment makers (OEMs),” says an industry observer.
He says beside the incentives to attract foreign players, the new NAP needs to define clearly what EEV cars are, if the country intends to move towards a EEV-centric producing country.
“The industry have been waiting eagerly for the NAP to set their direction, but it has not been forthcoming. What was initially thought to be revealed by mid-2012 have been delayed again,” he says.
Meanwhile, RHB Research analyst Alexander Chia says whether more global OEMs will be attracted to set up shop in Malaysia to manufacture EEVs will depend greatly on the incentives in NAP 2012.
“Structural issues are a limiting factor for the auto industry that the NAP needs to unwind. That includes high duty structures, high relative selling prices, non-tariff barriers, fuel subsidies and political considerations. Malaysia needs to identify and develop an industry niche to differentiate ourselves from other regional auto hubs like Thailand and Indonesia,” he says.
He says domestic demand will not be able to sustain the investment needed to begin local assembly of EEVs and export markets will need to come into the equation.
“For hybrids, the local market is still in the early stage of acceptance and education. The rollback of fuel subsidies leading to higher fuel prices could spur the takeup rate of EEV/hybrids as the payback period would be shortened. Obviously the duty exemption period will need to be extended beyond 2013 to maintain local demand,” he says.
According to him, there may be plans in the pipeline but few companies are willing to commit ahead of the actual details in the NAP 2012.
“The most obvious other candidates for local assembly of hybrids would be UMW Toyota. Edaran Tan Chong Motor Sdn Bhd or Nissan is unlikely to do so in the near future as they have no hybrid products, and the Leaf is a full electric vehicle plus there's no charging infrastructure. The Nissan A-segment competitor is still a few years away,” he says.