DRB-HICOM Bhd unit Malaysia Truck & Bus Sdn Bhd (MTB) has signed a memorandum of understanding (MoU) with DaimlerChrysler Malaysia Sdn Bhd (DCM) to establish business relationships and to start negotiation on the assembly of Mercedes Benz E-Class cars at MTB’s Pekan plant.
A statement from DRB-HICOM said the move was aimed at allowing DCM to consolidate its local assembly of both its commercial and passenger vehicles.
It could also open the way for a possible technology transfer by DCM to MTB via a special training academy to raise the skills level of the local workforce, it said.
The MTB facility is part of DRB-HICOM’s huge vehicle assembly complex located on a 103ha site in the Peramu Jaya Industrial Estate in Pekan, Pahang.
Analysts said that should the deal materialise, it could be the beginning of bigger plans by DCM to use DRB-HICOM’s large assembly operations for regional expansion.
“DCM could collaborate with DRB-HICOM in the future to assemble E-class cars for the local and regional markets,” said a motor industry analyst.
“It is a significant breakthrough for MTB and DRB-HICOM, both of which have tried for some years to diversify and upgrade their assembly operations,” the analysts said, adding that it would also have a positive effect on the group's earnings in the future.
The analyst pointed out that other carmakers such as Honda had made similar arrangements by having several assembly plants in the region to take advantage of the Asean Free Trade Area (Afta).
A DRB-HICOM spokesman declined to comment on the deal’s potential, saying the company was still in negotiations with DCM and would make further announcements when the time was right.
DCM has hitherto been using Oriental Holdings Bhd to assemble select Mercedes Benz E-class cars such as the E230.
Analysts also see the latest move by DCM as a signal from Oriental that it wanted to concentrate on assembling vehicles of South Korea's Hyundai.
If concluded, DCM's deal with MTB would also mean that it would stop using the assembly facilities of its partner, Cycle & Carriage Bintang Bhd (CCB), which has plans to beef up its operations to accommodate Japan's Mazda.
DCM is a 51:49 joint venture between DaimlerChrysler AG and CCB, which previously handled the wholesale distribution of Mercedes Benz vehicles locally.
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