PETALING JAYA: A feasibility study on the need for a new national car project should be conducted before embarking on the costly project, according to the Malaysian Automotive Association.
“A thorough study should be done before starting a new national car project. We have been down this road before, and not many countries have national car projects,” said president Datuk Aishah Ahmad.
“Proton and Perodua are here and very much relevant in the national context. If there is a new national car project, it must be a level playing field. It cannot be a situation where one car company accrues all the advantages or benefits.”
Aishah’s comments were echoed by many market analysts who questioned the need to start a new national car project.
They raised their doubts after it was reported yesterday that Prime Minister Tun Dr Mahathir Mohamad said the government was considering launching a new national car, as his brainchild “Proton” was no longer considered a national car after it was sold to China’s Zhejiang Geely Holding Group Co Ltd.
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Speaking during a dialogue at the 24th Nikkei Conference on the Future of Asia in Tokyo, Japan, Dr Mahathir said the government’s plan was to work with an Asian country, such as Thailand, South Korea or Japan, as a partner to roll out the new national car, citing their expertise in manufacturing automobiles. A fresh study on the feasibility for a new national car should be conducted, but market analysts are negative on the proposal.
Sceptical of the move, analysts told StarBiz that the government would need to conduct a study to assess the viability and practicality of Dr Mahathir’s ambition before starting another national car.
“No solid details have been given out yet, but we are quite apprehensive of the idea of having another national car in Malaysia,” an analyst with a local bank said.
“We think the move will cause anxiety among industry players, who have seen their margins being squeezed over the years,” he added.
The analyst pointed out that Malaysia’s automotive industry was already very competitive, and a high level of investments in research and development would be required to produce a car that could withstand the stiff competition.
“If the new national car were to go down the road of building budget and low-tech cars for the masses, then the government might have to ‘protect’ it by imposing taxes or tariffs on other brands,” the analyst explained.
“This will burden some consumers who prefer other car brands, as they would have to pay more,” he added.
Another analyst concurred, noting that the fast-changing trends in the automotive industry could raise questions about the viability of having another new national car.
“The auto industry is going into electric and self-driving vehicles. So, this raises doubts about whether the new national carmaker would have the relevant expertise to venture into this trend of the future,” he said.
Meanwhile, an analyst with a foreign brokerage, said the local market was too small to ensure the success of a new national car.
“Currently, the industry growth is already not so ‘fantastic’ for automakers. So, we think it will be quite tough for the new national car to achieve a breakthrough, particularly if it is only targeting the local market,” she explained.
Nevertheless, she noted, if the government was determined to launch the project, the business should be given to the private sector to manage.
“If it were run by the government or government-linked companies, it would likely lead to accusations of favouritism, protectionism, cronyism and rent-seeking... the Proton saga was enough to give us all a lesson on this,” the analyst with a local brokerage said.
Proton was Dr Mahathir’s brainchild during his 22-year premiership from 1981 to 2003. Launched in 1983, Proton was Malaysia’s first national car.
However, despite billions of ringgit in grants and subsidies pumped into the car maker over the years, it had failed to perform. Poor brand perception resulted in lagging sales and losses over the years and this led to Geely acquiring a 49.9% stake in Proton Holdings Bhd in September last year.
The takeover by Geely, which owns Volvo, was a welcomed move and considered long overdue by some analysts. They viewed it as an opportunity to turn around the company and help it regain market leadership.
However, Dr Mahathir reportedly said many local businesses suffered after Proton was sold to Geely.
In contrast to Proton’s fate, Malaysia’s second national car manufacturer, Perodua, has performed well and has been a success for the national car programme, thanks to its well-managed manufacturing and sales organisation and disciplined workforce.
Perodua is leading the automotive segment in the country with a 41% market share.
