Seize the day as China disrupts the automotive market
Published on: Tuesday, August 16, 2022
By: FMT
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Proton X50 - Bernama pic for illustration only
China’s auto sector had also seized a global lead in sales of electric vehicles when Shenzhen-based BYD announced that it had sold 2.3 million “new energy vehicles” to about 70 countries. New Energy Vehicle is China-speak for EVs.
Malaysia must seize the moment in terms of engagement with the China auto sector participants.
The major car makers in China are hungry for overseas sales and the 600+ million population of the Southeast Asia region is a magnet, as it has been previously for the West and Japan.
It’s certain that China’s car makers will aggressively seek to invest in joint ventures with suitable and established local partners.
So far, Proton’s partnership with the Zhejiang-Geely group has seen a successful trend including the X70 winning the NST Car of the Year Award in January 2020.
The X50 was last month’s sales champion though categorised as a sports utility vehicle (SUV). It was the first time that an SUV-type of vehicle has outsold the traditional saloon car.
There are important lessons to be drawn from the July sales figures released by Proton.
The big picture is that China is starting to roll out cars that are winning sales internationally and in Southeast Asia specifically. Think of the MG electric vehicle, made by state-owned SAIC, which was sold out following its debut at the Bangkok international motor show earlier this year.
How can Malaysia benefit from China’s disruption of the automotive market?
It’s apparent that car makers from China will follow the strategy of Toyota and Honda in Southeast Asia – they will invest in local assembly in each of the three major car markets: Thailand, Indonesia and Malaysia, a country which is valued for the buying power of its motorists more than its small population.
Malaysia must reach for China’s car makers and greet them eagerly.
Proton-Geely’s success is an example to learn what-to-do and what not-to-do.
Then there is the opportunity to seize the disruption of autonomous vehicles technology that the US and China auto industries are leading.
This is the forward vision that the government should embrace as automotive vehicle technology for commercial fleets will require lots and lots more of semiconductors and IT in autonomous vehicles. The money on the table, if it comes, will probably come from China car makers, not the US.
The government should be realistic and understand that there’s only a bit of Asean neighbourliness when it comes to competing for foreign direct investment in the automotive sector.
That’s why I’ve put the focus on Southeast Asia rather than on Asean.
It’s a no-holds barred competition which some of Malaysia’s leaders seem to appreciate. Many of them, though, are still complacent about Malaysia’s low desirability as an investment destination for automakers, China’s included.
The government knows about auto policy. We had a national car policy which led to Proton growing in corporate stature after the government mostly depoliticised the national car company when it approved the JV with Zhejiang-Geely.
Now seems to be the right time to have a more inclusive policy for the automotive industry.
In this regard, observe Penang’s sustained growth into a regional hub for semiconductors. This was due to the state government’s investor-friendly policies ably executed by its then chief minister, the late Lim Chong Eu.
Malaysia can do this again for this new era of vehicles being invented by the China car industry.
We don’t need to imagine the new paradigms. It’s happening in Thailand where the Petroleum Authority of Thailand has been given the green light by its government to enter a US$1.04 billion joint venture with Taiwan’s Foxconn to make EV batteries.
Malaysia’s key electric supplier, TNB, is stepping up its automotive sector electrification agenda as announced by its CEO last week. But when will more corporations and GLCs start positioning themselves for the new era of electrification?
The automotive industry is a key employer with a deep need for skilled human resources and the government should have a target of getting at least four of the ranking China car makers to invest in Malaysia within the next three years.
The views expressed are those of the writer and do not necessarily reflect those of FMT.
