Perodua plans to fast track overseas presence

Being number one is not easy. Because when you're at the top, there's only one way to go down!

In the case of local car manufacturer Perusahaan Otomobil Kedua Sdn Bhd (Perodua), it has fought hard to maintain its number one position at the top of the total industry volume (TIV) heap for quite some time now.

But as its managing director Datuk Aminar Rashid Salleh said last week during a media briefing, the car company has to do more than just being a jaguh kampung (village champion).

Aminar says Perodua has a five-year roadmap that 
will boost the company's competitiveness.

This is especially pertinent with the Government's call to liberalise the local automotive sector.

With various policies and initiatives in place, especially those to be announced under the revised National Automotive Policy (NAP), Malaysia is set to become a more vibrant and attractive place to do business.

One such policy which the Government is said to be quite serious about is the initiative to turn Malaysia into an energy efficient vehicle (EEV) hub.

This simply means that the doors will now be opened for more foreign participation, which will inevitably raise the bar in terms of competitiveness for local players.

Based on reports, leading the way to make Malaysia their operational base are a number of China-based automotive companies, which are said to be quite keen to tie up with local players and fast track their presence here.

EEVs are vehicles that 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 (CNG), liquefied petroleum gas (LPG), biodiesel, ethanol, hydrogen and fuel cell.

Unless something is done soon, the piece of the profit pie is going to get smaller for Perodua. As a compact car manufacturer, it has the advantage of selling cheap cars that are fuel efficient, but this could be impinged upon by the
entrance of new EEV players into the market.

At the briefing last week, Aminar pointed out that a new model had already been introduced to the market very recently and was directly competing with Perodua's best-seller, the Myvi.

Industry observers know this new model to be the Mitsubishi Mirage, which is priced from around RM55,000.

Fortunately, Perodua is not resting on its laurels, and has already put in place a five-year roadmap that will outline its growth strategy all in an effort to boost competitiveness.

While the roadmap details various strategies, one of the biggest emphasis moving forward for Perodua is boosting its export business.

Indeed, while there is still growth in the domestic automotive market the Malaysian Automotive Institute has projected TIV to grow to one million units in 2020 it is in the foreign market that the real opportunities lie.

Perodua currently exports its vehicles to seven countries, namely, Singapore, Brunei, Mauritius, Fiji, Sri Lanka, the United Kingdom and Nepal. It also exports its Myvi model to Indonesia under the Daihatsu Sirion badge.

Japan's Daihatsu Motor Co Ltd has a 20% stake in Perodua.

According to Aminar, Perodua has projected to sell 10,000 vehicles overseas this year, a figure it intends to double to 20,000 units by 2015.

It had already announced last week plans to ramp up its production capacity, namely, the setting up of a new plant adjacent to its present one in Rawang which will see it boost its capacity by at least 50%.

The new plant will be able to produce 100,000 vehicles yearly on a one-shift cycle while the existing plant is able to produce 200,000 units per annum on a two-shift cycle.

But being able to penetrate overseas markets is more than just ramping up production capacity. The car company needs to make its products more exciting and recognisable to customers globally.

Fortunately, it has a strong partner in Daihatsu. The Japanese company has a strong and proven track record that can help Perodua fast-track its overseas presence.

Its five-year roadmap would do well to address this issue, definitely, on how to penetrate foreign markets and become more than just a “village champion”.