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Chinese auto firms keen to work with Malaysian players in view of the revised NAP

  From The StarJuly 11, 2012

The Star (Petaling Jaya, Malaysia) - Several China-based automotive companies have expressed interests to tie up with local players to fast track their presence into Malaysia based on expectations that the revised National Automotive Policy (NAP) would liberalise the local automotive sector.

A source familiar with the matter said priority would be given to companies with energy efficient vehicles (EEVs) capabilities - an area that the Government is emphasising to turn the country into an EEV hub.

"There are a number of players from China that are keen to tie up with Malaysian car companies. But not all can adhere to the Government's EEV standards," the source told StarBiz.

According to earlier reports, policies under the revised NAP are expected to include initiatives that would turn Malaysia into an EEV hub and liberalise the below 1,800cc segment to make it more attractive for new players.

"It does not matter if the potential player specialises in petrol or diesel. We have several interested Chinese parties but they are not up to the Government's EEV standards," the source said, adding that one potential Chinese automotive company had been identified to manufacture right-hand-drive vehicles for the region.

According to the Malaysian Automotive Association, Chery sold some 3,000 units in Malaysia last year. – AFP

"It's still in the preliminary stages," the source said.

EEVs are vehicles that meet a set of defined specification in terms of emission level and energy usage including fuel-efficient vehicles, hybrid, electric vehicles and alternatively fuelled vehicles such as compressed natural gas, liquefied petroleum gas, biodiesel, ethanol, hydrogen and fuel cell.

The 1,800cc segment is the largest vehicle sub-segment in Malaysia, constituting 90% of the total passenger vehicles market. Only a handful of China-based car companies are operating in Malaysia. Among the top selling Chinese car companies in Malaysia are Chery and Dong Feng.

According to data from the Malaysian Automotive Association, Chery sold some 3,000 units in Malaysia last year while Dong Feng registered 19 units. Chery's models include the Eastar, Tiggo and A5. Dong Feng meanwhile and distributes heavy commercial and industrial vehicles.

One industry observer said China-made cars were not so popular due to perception quality and weak after sales service.

"Other brands, especially Japanese makes, have had a better foothold on the local automotive market for such a long time that Malaysians prefer to go for such models. Also, they (the Japanese car companies) have a better sales and after sales network.

"Ultimately, the Japanese car companies, such as Toyota, Honda and Nissan have a better brand perception that most other makes," he said.

An automotive analyst pointed out that the perception towards Chinese car companies was changing. "These companies, including Chery, are taking initiatives to push their brands and compete with other established players."

Last month, it was reported that Chery Malaysia, which is part of China's Chery Automobile Co, would be investing RM250mil in the country over the next five years, which would include the setting up of a production plant in Malaysia that would serve as a hub to make its right-hand drive cars for the region.

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