Market entry strategies / Malaysian Car Industry

Market entry strategies

Manufacturers of original equipment (OE) parts supply directly to motor vehicle assemblers who incorporate these into completely-knocked-down (CKD) vehicle kits. Foreign principals and local franchise holders have considerable influence over the product specifications and supply sources. Assemblers do not normally keep stocks of OE components but place planned orders based on the requirements of franchise holders.

Both Proton and Perodua currently source OE parts through the Vendor Development Program. Local franchise holders are essential sales support and are major stockists of a full range of ‘genuine’ parts for the make they represent (Nissan, Toyota, Volvo, etc.). It is estimated that ‘genuine’ parts account for only 30 per cent of the replacement market due to high prices compared to alternatives. A number of products manufactured by foreign OE producers have found their way into the replacement market in Malaysia through independent importers. Exclusive distributorship rights are generally granted to local sales agents, who are key participants in the distribution network, acting for local OE manufacturers, franchise holders and independent importers. Retail outlets (spare parts shops) play an essential role as stockists for workshops, which normally keep minimal stocks. In general, retail outlets stock a very wide range of fast moving parts from various suppliers whilst wholesalers specialise in selected types of parts or makes. There are hundreds of small proprietor-operated spare parts shops throughout the country.

Workshops are the main outlets for replacement parts as the majority of the motorists are dependent on workshop mechanics for recommendation and choice of parts.

Proton’s reply

             We have seen earlier that one of the key issues of post-AFTA concerns the fate of Proton and its readiness for AFTA. So how does Proton plan to answer its critics in response to the criticism it has received over the years? The only reassuring answer from Proton is that come 2005, it will be ready for the changes that AFTA will bring about. It is prepared in terms of competitive pricing, affordable products, and quality-built vehicles. Proton’s vision for the future is also not solely targeted at fending off the post-AFTA aggressors but more importantly, engineered to make the Proton car and the marque a well accepted global player. A great degree of attention has been given to design, taste, practicality, and build quality that are guaranteed to entice Malaysians, yet attract a far bigger and newer pool of international customers.

                                                                   

The development of Proton’s Campro engine has been another step forward that has made the marque less “Mitsubishi reliant” with engines ranging from a three-cylinder, 1000cc to a 2.5-litre V6. The recent unveiling of Proton’s Gen.2 1.6, which stands for ‘Generation Two, 1600’, employs Proton’s new Campro 1.6-litre engine. The Gen.2 came across quite positively, and that in itself spoke volumes, for very few Proton cars in the past have created such favourable first impressions. With the launch of the Gen.2, Proton claim to finally have a car that can compete on a level playing field.

                                                                   

The Proton cars of the future will also be developed around five family of vehicles, each capable of spinning off to produce its own numerous variants. With AFTA, Proton is looking forward to a larger market with over 500 million customer in Asean alone.