General Motors eyes top 3 spot in Malaysia

GENERAL Motors Corp (GM), the world’s largest auto manufacturer, is aiming to make Chevrolet one of the top three selling car brands in Malaysia.  

Although returning to the local passenger car market only recently after a long absence, GM had drawn up an ambitious plan to achieve “a significant presence” in Malaysia within five years, its executive director for Asean operations William S. Botwick said. 

Speaking to reporters at the 2004 North American International Motor Show that opened in Detroit on Sunday, Botwick said if GM’s growth plans were fully realised, Malaysia could potentially be the carmaker’s largest market in Asean after Thailand.  

He said: “We don’t go into a market to be a niche player ? we expect ultimately to be one of the market leaders.”  

William S. Botwick

GM's return to Malaysia is set against the company’s renewed focus on Asia, where motor vehicle demand in new markets like China and India is expected to explode in the current decade.  

Although GM sold only a modest 900 units in total of three Chevrolet models – the Aveo, Optra and Nabira – in the first three months since their Malaysian debut in October last year, it intends to do much more in 2004. 

Chevrolet distributor and DRB-Hicom Bhd subsidiary Hicomobil Sdn Bhd chief executive Norzahid Mohd Zahudi said a sales target this year of between 5,000 and 7,000 units had been set, while the number of sales outlets would be boosted significantly to 52 from 22 currently. 

The task, however, would not be an easy one. Norzahid said that among his priorities were building brand awareness, dealer networks and service capabilities in readiness for the expansion.  

Botwick, acknowledged that there would be stiff competition from national carmaker Perusahaan Otomobil Nasional Bhd (Proton) as well as from the more established Japanese and South Korean makes, which had already been in the market for some years.  

“We are up against very strong competitors,” he said.  

GM Asia Pacific president Fritz Henderson said the company had to play catch-up.  

“We have been substantially under-represented in Malaysia,” he said, adding that GM had decided to adopt a “one brand strategy” (Chevrolet) in the country rather than diluting resources in introducing more of the diverse group’s many brands. 

Analysts said the inevitable lowering of tariffs for Asean-made cars under the Asean Free Trade Area (Afta) was the impetus behind GM’s return to the region. 

The company has a large assembly plant in Rayong province, Thailand, which could be used to supply the entire region. GM had no plan at the moment to invest in a Malaysian plant, Henderson said, adding that GM faced intense competition in the US, where it was the dominant carmaker.  

A report by consultants KPMG released ahead of the Detroit motor show revealed that US carmakers like GM and Ford were losing ground to Japanese and South Korean brands, which were expected to continue gaining market share in North America. 

KPMG Malaysia’s Business Advisory Services director Aaron Lo said GM’s ambitious target for Chevrolet in Malaysia could be attainable if customer needs were met.  

Lo said that with the changing market environment in Malaysia, established players could lose out if they did not provide quality, value-for-money and product fulfilment. 

“There is not a lot of brand loyalty at the moment,” he said. However, Lo pointed out that the Japanese, South Korean and European manufacturers would unlikely sit tight, but “put up a good fight” with any new entrant.  

He said competition would be especially intense in the market for cars with engine capacity below 1,800cc, describing it as “a fierce battle ground”. 

Proton, especially, would need to step up efforts to compete more effectively even if it had bought time with the government’s announcement on Dec 31 of a new tax structure for motor vehicles, Lo added.  

Effective Jan 1, the import duty on completely knocked down motor vehicles from Asean countries had been reduced to a flat 25% from between 42% and 80%, but excise duty was raised to between 60% and 100% from what was previously a rate averaging 55%. Analysts expect a slight reduction in the price of mid-range cars.  

Botwick said the changes “look encouraging” even if there was still a long way to go before Afta was fully implemented. And when that happened, he argued, new players like GM would benefit. 

“Malaysia has been a closed market and much past consumer demand had been driven by tax and fiscal issues.  

“As the market opens, you will see customer preferences coming through,” he said. 

 Stock Watch On DRBHCOM

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3

Did you find this article insightful?


Next In Business News

AmInvestment lowers earnings forecast on Econpile
Quick take: Heitech shares rise on new contract
Tenaga again underpins KLCI’s early advance
Quick take: Straits jumps 25% on emergence of new shareholder
Trading ideas: HeiTech, Sime Darby Plantation, AMMB, Advancecon, Uzma
MMC remains deeply undervalued, says MIDF
AMMB continues to show resilience, TA Research says
Biden's trade rep pick says she will fight Chinese trade barriers
US factory activity scales three-year high, price pressures building
GameStop surges more than 18%, other 'meme stocks' also rally

Stories You'll Enjoy