THE 2008 FINANCIAL CRISIS AND THE STRATEGIES

OF CAR MANUFACTURERS IN MALAYSIA :

AN EXPLORATORY STUDY

Syed Anas AlHabshi

anas.alhabshi@gmail.com

Syed Omar Syed Agil

Universiti Tun Abdul Razak
syedomar@unirazak.edu.my

ABSTRACT

The 2008 financial crisis has been an extremely challenging one for many businesses
worldwide. Malaysia has not been spared from the difficulties posed by this economic disaster
even though we were supposed to be somewhat isolated from being hit very hard. This paper
examines the challenges faced by the Malaysian companies, in particular Automobile
manufacturers or sometimes known as the Automotive Original Equipment Manufacturers
(OEMs). This paper will also try and single out the least affected companies in Malaysia and
try to understand what are the best practices in having a sustainable competitive advantage.
The study has shown that car sales in Malaysia have seen a sharp decline especially
nd st
between in the 2 half of 2007 and the 1 half of 2008. This is mainly attributed to the global
economic condition which has also had an affect on Malaysia. Nevertheless, some
companies have been harder hit than others and this is what the author has tried to study. It is
been found that while short term strategies may have had some influence on the performance
of automotive companies in Malaysia, the long term strategies have a more profound
influence over the performance of companies even during the more difficult times. Companies
which have been steadfast in their long term strategies and have not been swayed by the
different conditions have been less affected than those which have chosen to adopt short
term strategies which are not well coordinated. The paper will also share some possible
lessons that can be learnt from other OEMs in trying to become competitive players in the
Malaysian automotive Industry.

KEYWORDS: Car Manufacturers, Financial Crisis

INTRODUCTION

The economic crisis facing the world today may be attributed to the sub-prime lending in the
USA. Quite simply put, subprime lending is when a financial institution lends out money to a
borrower who does not have a good credit rating, and charging higher interest rates due to
the higher risk of defaulting.

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Unfortunately when the prices of houses began to fall, home owners were forced to hold on to
their loans which by 2008 had already reached the point where the interest payments had
become exceedingly high. It was at this point that the number of defaulters drastically grew.
The average American, especially sub-prime borrowers, succumbed to their debts and could
hold on no longer. And finally the bubble burst.
This marked the beginning of the global financial crisis in 2008. The economy in the USA had
contracted significantly and analysts predicted that it would be worse than the one during the
Great Depression of the 1930‟s. Consumer spending suddenly crashed and imports to the
USA almost came to a grinding halt. Many of America‟s trading partners, such as Japan,
Great Britain, Korea and even Malaysia saw exports shrinking. This resulted in a chain
reaction and before long many countries which relied on exports to the USA to sustain the
GDP growth would see a contraction in their GDP‟s. Several countries which relied on the
financial services sector such as Singapore, the United Kingdom and Switzerland were also
badly hit due to exposures to the US sub-prime mortgages and securitizations. By the end of
2008, the global economy got from bad to worse.
The automotive industry is of great importance to a nation‟s economy. Due to the automotive
industry‟s comprehensive and highly intricate eco-system, a nation‟s economy benefits from a
wide range of avenues. Among them is the job creation that it brings about. This comes from
the automotive manufacturers themselves as well as the extended network of suppliers, sales
network, dealerships, after sales outfits and the list goes on. In addition, the auto industry also
has one of the largest economic multipliers of any sector of the U.S. economy, and is
sufficiently large that its growth or contraction can be detected in changes in the U.S. Gross
Domestic Product. In many states, employment in automotive and automotive parts
manufacturing, ranks among the top three manufacturing industries (Cole D, McAlinden S,
Dziczek K, Menk, D.M, 2008)
The automotive industry also contributes in terms of the Gross Domestic Product (GDP) due
to the volume of trade that takes place. This can be seen from the fact that cars are the
second largest purchase by a household after a house. In the USA, the sharp decline of the
automotive sector leading to huge layoffs had caused a spiral effect which contributed to the
Great Depression of the 1930‟s. The current bailout of the Detroit Big Three (GM, Ford and
Chrysler) is to ensure this does not happen again.
The current global automotive industry is in dire straits. Many car manufacturers across all
continents are feeling the pinch. Declining sales, contracting revenues, shrinking profits and
rising inventories are a common trend everywhere. Since the automotive industry is very
competitive and severely capital intensive, altering the business course could be likened to a
huge barge in the middle of the ocean trying to manoeuvre around ice-bergs. Once a course
has been set, changing it abruptly is not possible as was the case with the “unsinkable” ship
the „Titanic‟ in its maiden voyage in 1912.
When automotive OEMs are in trouble, they not only pose a threat to themselves but also to
the whole eco-system. Suppliers are not spared and so are the dealers, distributors and even
those in peripheral businesses such as logistics, after sales and financiers.

Measures to Cushion the 2008 Crisis

The Malaysian government has taken some drastic measures over the last few months in the
forms of stimulus packages. The first stimulus package of RM7 billion was announced on
November 4, 2008. Based on a letter from Datuk Seri Najib Tun Razak that was published in
the Wall Street Journal on November 26, Najib stated the following. “On November 4, I
introduced a 7 billion ringgit ($1.93 billion) pro-growth stimulus package to implement projects
with high multiplier effects, building on the previously announced 5 billion ringgit allocation of
existing investment capital to ValueCap, Malaysia's asset management company.

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The stimulus package as a whole is designed to enhance domestic growth and improve
market confidence. This package ensures that a larger segment of the population will realize
the benefit of productive expenditure from the government.
An article in the Business Times published on March 11, 2009 carrying the title
“‟Unprecedented move' to avert recession” reported that on March 10 2009, Najib announced
another stimulus package, only this time with a much larger quantum. The second stimulus
package dubbed the mini budget totalled RM60 billion. Najib said that the large stimulus
package was "unprecedented in the nation's economic history" and necessary given the
worsening global economy. Following the unveiling of the first stimulus package in November
2008, Najib said that “…without these efforts, the economy faces the prospect of a deep
recession”. The second stimulus package has four major thrusts which are to reduce
unemployment and increase employment opportunities; ease the burden on the rakyat; help
the private sector; and build capacity. Najib also announced the automotive scrapping policy
where a customer wishing to buy a Proton or a Perodua may opt to scrap their old cars (10
years or older) and receive a rebate of RM5,000 for it.

Global Automotive Industry Scenario

The global automotive industry has never seen a worse condition than the one it is currently
in today. Currently, the primary news headlines in the automotive industry has been about
shrinking demands; planned plant shutdowns, plant closures, and job cuts. Among the top
news so far has been the announcement that Toyota has forecast lower profits for 2010 by
more than 80%. This is primarily attributed to the rising Yen and the weak global car sales. In
Europe, BMW had announced that it had posted a fourth-quarter loss before interest and
taxes of 718 million Euros or a 78% decline, primarily attributed to weaker car markets, “risk
provisions” and personnel costs.

RESEARCH PROBLEM

The situation in Malaysia, though not as bad, is still relatively poor. When the economy slows
down, consumer spending also reduces drastically, more so on the big ticket items such as
the purchase of property, leisure holidays and cars. Due to this correlation, it would be safe to
say that the automotive industry is one of a few key indicators to predict the economic health
of a country. The number of new vehicles registered is one of the lagging indicators
1
prescribed by the Malaysian Department of Statistics.
On this note, it was a clear signal that the Malaysian economy was on a slight decline when
the Malaysian Automotive Association (MAA) announced that the Total Industry Volume (TIV)
for 2009 would contract by approximately 12.2%. Passenger car TIV (new registered
vehicles) in 2008 was 497,459 units, but in 2009, the figure is only 436,800 units. This was
compounded when the car sales for the month of January 2009 was significantly lower as
compared to the corresponding period the year before. Total passenger car sales for January
2008 was 36,396 units while it was only 30,189 units in January 2009, corresponding to a
17% drop in sales.

1
Lagging indicators tell us what had happened to the economy. It measures the performance of cyclical
movements of the leading and coincidental indices – “Malaysia Economic Indicators – Leading,
Coincident and Lagging Indices”; Department of Statistics, Malaysia; December 2008

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The primary reason why this paper has been initiated was to examine the impact of the 2008
financial crisis on the automotive industry in Malaysia and to understand how some car
manufacturers have been able to sustain profitability or at least limit losses in these trying
times. The paper will try to single out car manufacturers in Malaysia which have been the
least affected by the financial crisis and also to identify what the strategies are in trying to
address the challenges brought about by the crisis. The paper will also try to identify the
factors which have influenced the performance of these companies and their abilities to
sustain profitability during these tough times.

LITERATURE REVIEW

Significance of the Automotive Industry to the Economy

The automotive industry can be considered to be the single largest manufacturing sector in
the world. At least 10% of the Japanese and American Gross Domestic Product and
employment are generated from this industry. By 1988 the European Union‟s 12 member
states produced a total output value of 80 billion Euros and employed a total of 1 million
workers. The largest producing nations are the United States of America, Germany, France,
Italy, Spain and the United Kingdom.
Rosli (2004) wrote: “Efforts to develop the automobile industry would have significant impact
on resource-based industries, such as iron and steel, chemical, nonferrous metal, rubber and
plastic-related industries as well as petroleum based industries; and on non-resource-based
industries, namely electrical and electronics-related parts. In the tertiary sector, it provides
service-related activities, such as stamping, repairing, designing and engineering, banking,
shipping, storing, insurance and distributing and marketing channels. Of significance, the
automobile industry requires a set of production systems linking a wide range of industrial
organizations and technologies with great variations in size and sophistication. Over the span
of 23 years, (1980 – 2003), it was only during six years, that the proportion of the passenger
vehicles to the total vehicle production was less than 70%; the rest were either over 70% and
sometimes even exceeding 80%. On average about 76% of the TIV were passenger cars and
the rest commercial vehicles. This is in contrast with Thailand, Indonesia and the Philippines
where the production is dominated mainly by commercial vehicles over passenger vehicles.”

Factors affecting the Performance of the Automotive Industry

There are several factors that can significantly affect the performance of the automotive
industry in a given market. Since the purchase of a vehicle can be considered a big ticket item
and therefore account for a significant portion of the household income, the purchase of a
vehicle is a very serious consideration for most people. In Malaysia, car loan tenures have
grown considerably longer. Loan tenures of up to nine years are very normal in most cases
and in some special cases such as the Government Servant Scheme, tenure of 10 years is
also available for selected models. However, this is just the tip of the iceberg. The more
important consideration is the approval of the loan when an individual applies for one to buy a
car. This is probably the biggest lever in determining the success or failure of the automotive
market in any given country.
Armin Baniaz, acting head of Proton Edar Dealers Association (PEDA) was quoted as saying
“... banking facilities and hire-purchase loans are the main factors that will determine the
sustainability of the automotive industry. On top of that, over 90% of car dealers and vendors
operate with banking facilities while over 90% of customers buy using hire purchase loans.

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Currently, the approval rate for car loan applications in Malaysia is at 40% but it could go
even lower this year”. This means that only 40% of customers who book a car at a Proton
dealership will get a loan approval. In other words, the loan rejection is a staggering 60%. It is
not really a matter of getting buyers for the cars, it is about getting buyers who qualify to get a
loan to buy the car in the first place that matters.
The other main factor affecting the automotive industry is the availability of the scrapping
policy. The following section will dwell into this area and uncover some of the truths and
myths of the scrapping policy. There are several countries which have already successfully
implemented the policy and there are some others which are still coming to grips with the idea.
In the recently announced second stimulus package by the Malaysian government, a
scrapping policy was introduced. During the announcement of the “Second Stimulus
Package” on 10 March 2009, Datuk Seri Najib Tun Razak, at the time Malaysia‟s Deputy
Prime Minister, who also holds the portfolio of Malaysia‟s Finance Minister, disclosed that the
automotive sector also got a shot in the arm, with a rebate of RM5,000 given to owners who
trade in their cars of at least 10 years old for the purchase of a new Proton or Perodua vehicle.
It is still unclear how this will affect the market as it is only applicable to Proton and Perodua
cars.
When the International Trade and Industry Minister, Tan Sri Muhyiddin Yassin was asked to
elaborate on the package, he disclosed that “…the government will finance part of the
discount borne by Proton and Perodua. This incentive will, to a certain extent, give the
opportunity to defend the number of cars sold this year. …there were more than one million
cars aged 15 years and above while 10-year-old cars were less but the number is still big…
With this offer, I hope 100,000 cars can be sold and this is a big number. "I believe though the
government has to forgo RM5,000 income for a car, the returns to the industry and economic
activities are even better,".
Getting the right car to the right market requires some degree of market intelligence. Ishak, N.
K., Mutum D., Ghazali, E. and Fan C. K. (2006) suggested that the current era of relationship
marketing, is to ensure business success through an in-depth understanding of the
customer‟s needs and wants. This should cover current as well as potential customers alike.
This is because when customers are highly satisfied, they are more likely to be loyal. Giving
customers what they want is a key strategy to improve profits. To do this, car manufacturers
have opted to build cars using the „modular assembly concept‟. Using common platforms,
interchangeable front end and back end architectures and sub assembly modules, cars can
now be built more efficiently, and with added flexibility to customize specific requests(C.
Benko and W. McFarlen, 2003) Although CRM is relatively new in Malaysia, it has been found
to be useful to automotive distributors and dealers to identify and reach target customers,
reach specific customer segments and to identify various customer needs. This is where
Toyota has mastered the art. With its vast array of models, each specific country can build a
market and sell the products that best suit their needs.

Strategies of the Big Five Car Manufacturers

Upon close examination of the recent data, it was found that almost every model of vehicle
analyzed had a decline in sales for 2008 from the same month in the previous year. The only
models which did not have a decrease in sales for the period was the Honda Jazz, Proton
Saga, the Honda Accord and the Toyota Vios. A tabulation of registered sales by OEM
indicates clearly that the top 5 manufacturers are Perodua, Proton, Toyota, Honda and
Nissan. It is only fair to take a closer look at the least affected automotive OEMs, namely
Toyota, Honda, Proton, Perodua and Nissan. The strategies of each company will be
discussed in the following sections.

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Strategies Employed by Toyota
The success of Toyota is not something that was initiated overnight. Instead, Toyota has long
been working on its durability. Today, Toyota is renowned for its performance, endurance and
above all, its durability. Until very recently, Toyota has always been very conservative in its
designs. Shapes and styles which were deemed to have any negative impact on the durability
or impacted the manufacturing processes were discounted earlier on in the development
process. This managed to create the level of assurance that the Toyota is a very reliable car.
However, Toyota has realized that the discerning customer has begun to demand more from
their cars and in recent years, Toyota designers have managed to overcome the barriers they
had before and have come up with bolder and more revolutionary designs such as in the new
Toyota Camry and Vios.
In terms of after sales, Toyota has managed to top the list in the JD Powers Customer
2
Satisfaction Index (CSI) Ratings . (CSI measures the satisfaction of vehicle owners who
visited the dealer service department for maintenance or repair work during the first three
th
years of vehicle ownership. The study, now in its 6 year in Malaysia, provides an overall
customer satisfaction index score based on six measures: service initiation, service advisor,
in-dealership experience, service delivery, service quality, and user-friendly service). Toyota
is usually in the top 5 positions ever since the study was conducted in Malaysia. But for the
first time, Toyota has not only topped the list, but done so at an amazing 767 points, with
Honda and Nissan trailing at 755 and 746 points respectively. This means that Toyota has
gone well beyond business as usual to try and delight customers as they go for the routine or
scheduled maintenance. Customers always wish to have a trouble free ownership experience.
With the level of reliability of the cars produced coupled with the level of service that is
unsurpassed, Toyota is well on its way to a promising future in Malaysia.
Among the many promotions Toyota is working on is the Toyota financing packages. With a
range of packages available from “Toyota Drive” which is a basic loan package offered by
UMW Toyota for its customers, “Al-Ijra‟ Thumma Al-Bai” or AITAB which is an Islamic
financial service for its discerning Muslim customers, Flexi Plan, which is a financial service
where the interest is charged on reducing balance and finally conventional Hire Purchase
packages at competitive rates.

Strategies Employed by Honda

Recently, Honda Malaysia launched a promotional campaign offering free maintenance on
selected Honda cars for a period of 2 years. On the Honda website and also at the
showrooms, customers can easily obtain the periodical service prices which the customers
will have to pay for during the life of the vehicle. This price indication will serve as very good
guide to the customers especially those who have the perception that the price to maintain a
Honda vehicle is exorbitant. By giving out this guide, Honda Malaysia is able to squash the
misperception that the maintenance on a Honda vehicle is expensive. In fact, it may even
support the claim that Honda vehicles are actually cheaper than its competitors. Given that
the Honda brand value is high among Malaysians, having a reasonably low cost of
maintenance and thus low total cost of ownership will increase the brand value even further.
Having a good product with a lower total cost of ownership is definitely a Unique Value
Proposition (UVP).
Honda has also been adopting a strategy of branding the vehicle as a status symbol
especially in Malaysia. This is the reason why the sales figures of Honda vehicles are not as

2
CSI is a nameplate study, which means that performance is reported at the manufacturer level (i.e.,
Proton, Perodua, Toyota, etc.), rather than at the model level (i.e., Saga, Myvi, Vios, etc.).
http://www.jdpower.com/faqs-auto/ March 8, 2009

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large as Toyota, which has a volume strategy. Thus far, Honda has been quite successful in
elevating the brand value of its vehicles. But none of these measures would give a boost to
the brand if the product did not meet the tastes and needs of the customers in the first place.
Among the relevant aspects are styling, quality and performance. But product quality is by far
a winning criterion. Customers do not appreciate having to go to the service centres to
complain about problems. Given a choice, customers would prefer not to have to visit the
service centre at all after the purchase of their cars. In Malaysia, Honda and Toyota vehicles
are perceived to have the least number of defects per vehicle. In the 2008 JD Power Initial
3
Quality Study , Honda City & Honda Civic both came out top of the list in the entry midsize
segment and midsize segments respectively. This is the kind of achievement that allows
Honda to command an even higher premium to its brand.

Strategies Employed by Perodua

Perodua has had phenomenal success with the Myvi model which was launched in 2005.
Since then nearly 300,000 units have been sold. And recently, the Viva has also enjoyed a
decent degree of success, albeit not as good as the Myvi. Unfortunately the Kenari and the
Nautica have not been as largely accepted. With the Myvi and Viva, Perodua‟s success was
hinged on the fact that Perodua knew exactly what the customer was looking for. The main
issues were size, fuel consumption and ease of ownership. It was here that Perodua
managed to get a grasp of the customer‟s wants, needs and desires. The Myvi has several
key unique selling propositions (USP), mainly space, ease of use and ease of maintenance.
The Viva‟s USP was primarily fuel consumption and since the price of fuel shot up from
RM1.92 to RM2.70 shortly after the Viva was launched, it literally clinched the deal to the
point where Perodua had to increase its plant capacity just to cater for the surge in demand.

Strategies Employed by Proton

Proton has not had significant success with some of its models especially since the Gen2,
Juara, Savvy and Satria Neo. At the time these models were launched, Proton was under the
impression that customers should be exposed to these futuristic models. In other words,
Proton was adopting a push-strategy. Unfortunately, for several years Proton was faced with
a dismal sales figure with these models. One of the fundamental errors was the fact that the
Malaysian market was not yet ready for the vehicles that Proton was trying to market in
Malaysia using the Proton brand name. These models were developed with European tastes.
For example, in the UK, hatchback cars are more popular than sedans by a large proportion.
However, in Malaysia this is the reverse. In the Malaysian market, sedan vehicles sell much
better than hatchbacks. This was clearly proven when the Proton Gen.2 was developed into a
sedan and introduced as the Proton Persona, sales began to show a remarkable
improvement.
Another model which has not been favourably accepted in the Malaysian market is the Proton
Savvy. Although most magazines both in Malaysia and overseas have given very good
reviews with a string of awards under its belt such as the Malaysian Guinness Book of
Records for most fuel efficient car in its segment, and the best Small Car of the Year 2006,
the car sales have still been less than satisfactory. Again, it boils down to the fact that Proton
has tried to offer to the discerning Malaysian market, a car that is not desired or wanted in the
first place. Among the reasons why the Proton Savvy has had dismal sales is due to the fact

3
The 2008 Malaysia Initial Quality Study (IQS) is based on evaluations from approximately 3,200
owners who purchased their new vehicle between September 2007 and May 2008. Vehicles evaluated
included 52 passenger car, pickup and utility vehicle models covering 15 different brands. The study
was fielded between March and July 2008.

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that it is powered by a 1.2 litre Renault engine. Somehow, Malaysians have had a series of
bad experiences with French cars. In the case of Proton, 2 earlier cars, the Proton Tiara and
the Proton Waja 1.8 were also fitted with French engines. The Tiara had a 1.1 litre Citroen
engine while the Waja 1.8 had a 1.8 litre Renault engine. Both these cars were very well
known for the huge number of problems the cars had, including the prohibitively high cost of
maintenance and spare parts. As a result, these negative perceptions were just too strong for
Proton to work against. To date only about 37,000 vehicles have been sold since its launch in
June 2005. Another setback was that the car was launched only weeks after the successful
launch of the Perodua Myvi. Proton had not considered the Myvi as a direct competitor as it
was one segment larger than the Savvy. Unfortunately, the Malaysian public did not have the
same impression and a direct comparison was frequently made by customers and salesmen
alike. Hence, the Proton Savvy was often at the losing end. Customers made their buying
decisions based on what they knew best, and that was the interior space of the vehicle. The
fact that Proton was using a foreign engine which was markedly more expensive due to the
sudden increase in the exchange rate of the Euro to the Malaysian Ringgit only compounded
the issue even further.

The Turnaround
Proton began to embark on a Business Turnaround in 2006. After the new management took
over, various changes were immediately effected. There were a list of 11 main initiatives
ranging from “Enhancing the Product Portfolio”, “Improving Quality”, “Improving Sales and
Distribution” and “Enhancing Human Capital” just to name a few. In the initiative “Enhancing
Product Portfolio”, several sub-initiatives were developed such as establishing a „New Product
Introduction‟ or NPI process. This process had several gateways that had to be met diligently.
By complying to this process, the management at Proton could ensure that the products
developed met the necessary quality standards and equally important, Proton could sustain
the manufacture of the components since the vendors in turn had to comply with the NPI.
Additionally, Proton was to follow a new product development process and an element called
Voice of the Customer or VOC was introduced. A new division called the Marketing Division
was introduced and this division took on the daunting role of facing customers and identifying
exactly what it was that they liked about Proton cars and also more importantly, what they did
not like about the car. The list of dislikes was obviously very high. All these findings were then
compiled and the information was then fed back to the Research & Development Division in
order for the development of the new car to begin. Due to the product development efforts
and the positive response to customers‟ needs and complaints, new models such as Persona,
Proton Saga with the 1.3 litre Campro engine which was developed in house and Exora which
enhanced customer‟s trust in the product and in the brand.

Quality Assurance
Another common practise among OEMs is to have Resident Engineers at the Vendor‟s site
during the initial stages of production, just to ensure that the vendor complies with the basic
quality requirements. A resident engineer is usually an experienced engineer from the OEM,
typically from the Quality, Procurement or Production divisions, and is stationed at the vendor
premises for a pre-defined period of time. The resident engineer will advise the vendor about
the specific requirements of the OEM which the vendor may not already be familiar with. The
Resident Engineer will normally ensure that the vendor production has stabilized before
returning back to base.

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Strategies Employed by Nissan
Up until 2007, Nissan sales in Malaysia were almost negligible. Nissan did not have any
models that were really making any impact or generating any significant interest in buyers.
When the Nissan Grand Livina was launched however, sales began to see an immediate
increase and the Nissan brand has become another major player in Malaysia again.
The MPV market in Malaysia has been growing steadily over the years, from a meagre
13,570 units in 2001 to 53,744 units in 2008. It is within this segment that the Nissan Grand
Livina has managed to gain popularity. Malaysians are not only looking for a people mover,
they are looking for one that is both affordable and practical with a satisfactory level of
comfort to boot. The Livina managed to fill a void that had been there for a long while.
Suddenly customers were given a choice they liked and they snapped it up. Nissan had a
waiting list of approximately 10 months in the initial stages of the Livina introduction.
After understanding what the customers wanted, Nissan came up with 1.6litre and 1.8litre
versions of the Livina. Nissan needed to introduce both variants since there was a demand
for both engine types. This was clearly proven when the market share for sales in 2008 for the
Nissan Grand Livina 1.6 and 1.8 were 10% and 12% of the MPV market respectively.
Unfortunately, the sedans that Nissan introduced have not caught on as well as their rivals.
One possible factor is the price of the vehicles themselves. Perhaps if they were marginally
cheaper then they would have caught on. Another aspect is the overall size of the vehicles,
which are relative smaller than their rivals, the Honda City and Toyota Vios. The primary
reason why only the Livina made great impact was that the Malaysian customers were
looking for an alternative for the MPV‟s available. In the case of the sedan market, the Honda
City and Toyota Vios had already made a strong presence in their segment and thus new
entrants would find penetrating the market to be extremely difficult. This would be
compounded by the high perceived price of the car and the fact that it had yet to prove itself in
terms of reliability, a convenient service network and availability of reasonably priced spare
parts.

LESSONS TO BE LEARNT BY OTHER OEMS IN MALAYSIA

Having seen the various strategies employed by the companies mentioned above, it is a good
idea to summarize what we have observed so that other OEMs can benefit from this research.
The findings are discussed below.

Importance to Continue Product Development Efforts

For most of the Automotive OEMs, the current economic turmoil is a very alarming and
troubling time. However, product development initiatives must never be neglected. Although
product development poses a huge cost outflow where the typical product development cost
including tooling, jigs and dies is about RM500 Million, it cannot be sidelined, especially
during economic slowdowns. This is because when the economy begins to improve, car
companies need a fresh product to entice buyers. Only the car OEMs with the right products
at the right time will be able to capitalise on the positive economic climate. By declaring huge
losses, some companies such as Toyota may have already taken into consideration the
capital expenses on its product developments even though potential revenues may not be
able to support that cash outflow in the same year. But the benefit is a ready and fully
developed range of models as soon as the economy picks up again. All the top 5 companies

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in this study have a new model in their stable. From Toyota‟s 2007 Vios, Proton‟s 2007
Persona and 2008 Saga and the recently launched 2009 Exora, Perodua‟s 2007 Viva,
Nissan‟s 2007 Grand Livina and the 2009 Honda City, all these models were either developed
during or just shortly before the crisis struck. If these models were not developed and
therefore were not available for launch, the sales of the said OEMs would probably not be as
good.

Managing the Supply Chain

OEMs also need to be concerned about their suppliers. During the development process,
some suppliers may have difficulty with financing. Especially during these trying times when
the revenues are fast reducing due to shrinking demands. Credit lines tend to become a big
problem due to the poor credit rating of the automotive industry in general. At this time, the
OEM must be firmly behind the supplier to ensure that the new model is developed as per
design intent or else, certain components may not be ready at the time of launch and this
would not be acceptable at all. The problem is that the financial distress is not only being
experienced by the smaller suppliers but even by the big global players such as Delphi,
Continental and Denso just to name a few.
For Malaysian National Car maker Proton, where product development is carried out
holistically in Malaysia, getting the full support from the suppliers is very crucial. Fortunately,
the economic slowdown in Malaysia has yet to reach its peak. Nevertheless, many suppliers
are already in desperate times, trying to secure financing and extending credit lines. Without
the sufficient funds, product development may not be comprehensive. Hence, Proton would
have to lend an extra hand to cover for some of the vendor related product development costs.
The main problem here is that the cash situation of Proton as a company will also be under
severe threat. This activity may potentially result in the product development costs escalating
well beyond the RM500 Million mark, which can be financially impossible. This is where the
government funds become extremely important to ensure the complete automotive eco
system is sustained. The recently announced Automotive Development Fund (ADF) is one
such government initiative from the Malaysian government with primary intent of saving the
automotive vendor community in Malaysia.
Toyota has a system called “Kieretsu” whereby the vendors are part of the “Toyota family”. In
this way, Toyota is able to capitalise on the economies of scale and procurement can be
centrally controlled from Japan for all its manufacturing outfits including subsidiary companies
such as Daihatsu and Perodua. In doing so, raw materials can be purchased as prices
significantly are lower than any competitor is able to get. This gives Toyota the upper hand to
reduce the Bill or Material (BOM) costs even further.

Bringing the Right Product to Market

Currently, since most customers have concerns about making purchases on big ticket items,
it does not mean they will not make the purchase at all. Instead, they may start to scout
around and compare products on offer from various OEMs. When their financial status
permits, they will quickly make the purchase based on the decisions made earlier. This
means, the purchase is merely delayed. Therefore, OEMs cannot afford to stop offering the
products just because the economy has slowed down. Rather, entice the customers so that
the moment they can afford the car, the first one they consider is the one which has won their
hearts when they were in the financial difficulty.

UNITAR E-JOURNAL Vol. 6, No. 2, June 2010 87

In this regard, it can be noted that Naza Kia has indicated that it intends to bring in the Kia
Forte, a C-Segment sedan which is very popular in Korea, China and parts of Europe into the
Malaysian market. Judging from the success of the Toyota Vios, Honda City and Proton
Persona, this car may have a high possibility of success since most of the cars mentioned are
also in the C-Segment Sedan category which is a very dominant category in the Malaysian
market.
The Proton Exora, Proton‟s first attempt at a Multi Purpose Vehicle (MPV) is also a very brave
move. The vehicle was launched on April 14 2009. This is the beginning of the economic
slowdown of the Malaysian economy. So far bookings have been quite positive for a typical
launch of this magnitude. Given that the economy is not at its best health, and that this is the
first MPV from Proton, especially with a 1.6 Litre engine, the number of units sold is very
encouraging. Initial reports by a select few journalists who were privileged to test drive the
vehicles shortly before the launch have been nothing but praise. But it will take a lot more
than merely journalist evaluations to secure bookings and ultimately sales of this kind of
vehicle. The MPV market in Malaysia has been growing steadily over the years. Currently,
total MPV sales is approximately 11% of Total Industry Volume and with more players
introducing MPV‟s recently, that ratio may well grow. The recent success stories have been
the Toyota Avanza, Toyota Innova and Nissan Grand Livina. It will be interesting to see how
the Proton Exora will fare in this segment. The recent launch of the Perodua Alza, the latest
MPV to hit Malaysian roads was launched on November 23 2009. With the fuel price at
RM1.80 and the recently adopted ruling where all occupants of a vehicle are required to
buckle up their seatbelts, the potential rise in the number of MPV‟s on Malaysian roads is
highly likely. Unfortunately, the author wishes to point out that at the time of writing this article,
the sales figures for both the Proton Exora and Perodua Alza were not available.

Inventory Management

Most car manufacturers have to keep some level of inventory. This is because the time it
takes between the cars being produced to when the cars are delivered to the customers may
take at least 2 weeks. Some companies forecast what the customers will want to buy and
produce the cars in advance. In this way, a potential customer may get delivery of the new car
very quickly since the car is already in stock. However, this approach has its limitations. For
example, it takes at least 3 months lead-time for the automotive suppliers to order raw
materials in order to produce the component. This is especially true when the component
requires raw materials to be ordered from overseas. When the OEM has ordered these
components, it has to assemble the vehicles quickly since some of these components have a
shelf life and also once these components have been ordered, the OEMs need to honour the
orders come what may. It is when the forecast goes wrong that all the plans go haywire.
Stockyards pile up with “the wrong cars”, cars which were built but nobody wants to buy.
Typically, the ultimate stock level for an OEM should be about 1.5 months worth of stocks.
For example, if an OEM sells 4,000 cars a month, then there could be up to 6,000 cars in
stock at any given time.
However, the current stockpile of most OEMs the world over is very much higher than this.
Due to this, production has been slowed down to curb the number of unsold cars in inventory
from growing to an uncontrollable figure. In some European and Japanese car factories,
production has ceased since December and some companies have even given extended
4
Christmas holidays .

4
“Today, it was reported BMW’s Mini plant had quietly let slip about 90 more temporary workers over
the Christmas break and Honda extended its Christmas holiday shutdown all the way to June.” – “THE

UNITAR E-JOURNAL Vol. 6, No. 2, June 2010 88

Promotions

January 2009 saw a very bad sale figure for most OEMs in Malaysia. In February onwards,
car advertisements have been more aggressive and airtime on local radio and television
media channels have also been more prominent. Customers are all concerned about cash
flow. Having a new car also means the loan repayments will have to continue and the
maintenance will be an issue. The typical gimmick of „Zero Down-payment‟ has lost its bite. In
the past, salesmen have been able to offer a vehicle of slightly lower specifications, and
processed the loan documents for a vehicle with the highest specifications available. In this
way, when a customer buys a vehicle such as the Perodua Myvi for say RM45k, the
salesman will process the loan for the same vehicle but with the higher specifications, at
RM50k. The RM5k difference will be used to pay for the down-payment of the vehicle or in
some cases be given back as a “rebate” to the unsuspecting customers. In the end, the
customer has to pay for a loan which is more expensive than it could have been. Since the
financial crisis, banks have been more stringent in their loan approvals, and this kind of
manipulation of the system has been more closely monitored. Hence, salesmen have to be
more knowledgeable about their products and how they fare against competitors.

Promotions best suited for tough economic slowdowns

Among the problems facing a car owner, especially during these difficult economic slowdowns
is car maintenance. When someone owns a second hand car, especially a relatively older car,
there will always tend to be a problem or two which requires fixing. More often than not, these
small repairs can be costly especially when they recur. Due to this, some car owners tend to
opt for a brand new car. The only problem is that these new cars require the periodical
maintenance carried out religiously. It is essential that these maintenance jobs are done on
time and at the authorized service centres in order to maintain validity of the manufacturer‟s
warranty. This may burden the car owners since authorized service centres may charge a
little more than the independent service workshops.
In November 2008, Honda Malaysia launched a promotion called “Low Maintenance”. In this
st
promotion that lasted 2 months, until 31 December 2008, selected models such as the
Honda Stream and Honda Civic came with free maintenance for 18 months or 30,000
kilometres. That means that for up to 30,000 kilometres or 18 months, the owner will not have
to worry about paying for any maintenance.
This promotion is very similar to other car promotions especially in Europe and the USA.
However, most promotions of this sort give only up to three years of free service. There have
yet to be car manufacturers which offer up to five years of free maintenance.
If a car manufacturer were to launch a car in this current economic scenario, then one
possible way to do it with a “Big Bang” would be to launch a new model (at least some minor
facelifts) with a revised price to incorporate the cost increase to offer free scheduled
maintenance for up to five years. Although there could be a minor price increment, the end
result is a value proposition that would be highly attractive. If the OEM is confident about its
product quality and reliability, then it could also promote its five year warranty. Instead of
selling a car, the OEM unique value proposition could be tuned and marketed as selling
“Peace of Mind”. These are several benefits of having the five year maintenance programme.
Firstly, the customer‟s car would be better maintained since the owner would most definitely
try to send in the car as soon as the scheduled maintenance is due. Secondly, the owner

WEEK THAT WAS: Buckle up for a long rough ride”; Graeme Roberts, just –auto.com editorial team,
16 January 2009; retrieved from http://www.just-auto.com/article.aspx%E2%80%A6 on April 3, 2009

UNITAR E-JOURNAL Vol. 6, No. 2, June 2010 89

would have to bring in the car to the service centre as soon as a problem is found. This would
most definitely improve throughput of the service centres. Finally, since the cost of the five
year maintenance has been accounted for in the price of the vehicle, the actual revenue
stream for the service centres will be more predictable. Furthermore, the costs for the five
years maintenance programme would have been collected at the point of sale of the vehicle.
This money could be used to generate better cash preservation initiatives as well as rolling
capital for other investments.

Organizational Strength

Like any other industry, the automotive industry is plagued with a host of management
concerns. Due to the complexity of the business it is imperative that these concerns, ranging
from the product development, raw material purchases, manufacturing, sales and distribution,
have to be carefully orchestrated in order to support the smooth running of the business.
Therefore having an organization that works together between divisions well is definitely an
advantage. In most cases, working in silos is a problem. Divisions find it difficult to cooperate
and get a cross functional task done efficiently and effectively. However, in Toyota, the
workforce culture is second to none. The culture of „Kaizen‟ or continuous improvement has
been the foundation for the sustainable continuous improvements. The „Ohno‟s Circle‟ is
where a manager is asked to stand within a circle drawn out of chalk. The circle is just big
enough to stand in. The idea is that the manager has to look at the production line as it is
running and note every little detail which could be improved. This may go on for two hours
and the superior will then ask for a detailed report the following day. This is to ensure that the
manager is in touch with the shop floor.

Potential Promotional Ideas

To counter the concern by customers that the service and maintenance costs of a vehicle are
too high, an OEM may offer service vouchers at the point of sale of the vehicle. This set of
vouchers may be for as long as three years. Instead of giving the vouchers for free, the OEM
may offer the vouchers to the customers for a fraction of the total price of maintenance. In this
way, the customer does not have to worry about maintenance costs escalating over the years.

Proton Edar could offer the customer to buy the service package as a pre-paid deal at a
discounted rate. Assumng the total cost of maintenance is RM1,500 for the given period, the
customer could opt to purchase the service vouchers at a 40% discount at say RM900 only.
Since the vouchers explicitly mention the parts and labour carried out at each service interval,
the customer no longer has to be concerned about escalating maintenance costs since for the
given period, the cost has been paid for upfront. In this way, Proton Edar will be able to offer
the customer peace of mind. In addition, this system will also guarantee that the customer will
come back to service the car at the recommended mileage intervals. It also provides cash
upfront to Proton Edar and this is something very much needed at this juncture. Although the
vouchers are sold at a discount, the typical profit margins for parts and labour are 40%
anyway, which means that the vouchers can be sold either at cost or even slightly higher than
cost and yet please the customers with a large discount. In economic slowdowns, customers
typically try to avoid periodical maintenance on their vehicles. This can impact car
manufacturers in two ways. Firstly, the throughput into service centres will decrease resulting
in a contraction of revenues. The second impact is that since the customers do not maintain
their vehicles, these cars may ultimately break down in the middle of the road and this will
give a negative connotation to other motorists about the particular brand of car.

UNITAR E-JOURNAL Vol. 6, No. 2, June 2010 90

This system of prepaid maintenance is very similar to a passenger who books for an Air Asia
flight and chooses to pre-purchase the baggage check-in. If the baggage is paid for on-line
and in advance, the passenger gets a 50% discount. However, if the passenger only decides
to bring luggage at the check-in counter without having pre-booked the luggage, the price
would be significantly higher.
For Proton and Perodua, the recently announced „scrapping incentive‟ by the Malaysian
Government should be immediately and effectively exploited. In this government incentive
customers wishing to buy a brand new Proton or Perodua vehicle may opt to trade in any 10
year old car (or older) for a RM5,000 cash voucher which can be used for the down-payment
of a new vehicle of their choice. Some terms and conditions may apply, but in general it is
hoped that with this new incentive, the sales of Proton and Perodua vehicles will rise in the
immediate future especially during these very difficult times. The entire automotive industry
and its eco-system are in jeopardy if these two companies do not pull through during this
period.

SUMMARY

Based on the case study of car manufacturers in Malaysia it is evident that each automotive
manufacturer has its own set of strategies that can improve sales to a certain extent during
the economic uncertainties. However, the long term strategies which effectively executed
such as the case with Toyota will give the maximum benefit to the organization. For this to be
realised, a strong leadership coupled with succession planning is essential to ensure the long
term strategies remain executed even though there is a change of leadership. In many OEMs,
the strategies are designed to bring short term gains. This will ultimately look good for the
current leadership. However when there is a change in leadership, the strategies take on a
slightly different course and whole workforce becomes confused and lethargic due to the
frequently changing directions.
It is also important to point out that due to the dynamic nature of the automotive industry, and
since the article was written in 2009, some facts may have already become obsolete.
Reader‟s discretion is therefore highly sought.

UNITAR E-JOURNAL Vol. 6, No. 2, June 2010 91

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 APPENDIX

Table 1
Registered Sales of Cars in the “A” Segment for 2007

2007
Model Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Kancil 2463 2600 2604 1946 1576 1216 1323 961 728 658 699 914 17688
Kelisa 1192 847 2061 1722 450 201 76 17 4 3 3 1 6577
SEGMENT A

Kenari 591 691 424 590 607 466 473 468 419 394 367 335 5825
Atos 328 110 295 199 663 173 384 180 110 15 1 234 2692
Picanto/Suria 581 437 347 318 523 449 432 384 269 262 219 220 4441
Smart 70 75 90 94 35 52 8 13 3 12 35 79 566
Savvy 924 722 532 325 226 288 470 725 582 430 321 297 5842
Spark 0 0 0 0 0 0 0 0 0 0 0 0 0
Sutera 479 410 294 221 298 199 216 169 139 143 89 127 2784
Viva 0 0 0 0 3131 6827 5860 6710 6132 5711 5254 6592 46217
Others 6 5 16 7 33 48 21 31 26 21 22 12 248
Monthly Total 6634 5897 6663 5422 7542 9919 9263 9658 8412 7649 7010 8811 92880

Table 2
Registered Sales of Cars in the “A” Segment for 2008

2008
Model Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Kancil 1182 613 688 705 466 475 600 606 554 369 510 347 7115
Kelisa 24 179 7 1 0 0 2 2 0 33 4 79 331
Kenari 207 201 367 351 341 429 447 353 310 232 265 123 3626
SEGMENT A

Savvy 308 252 210 294 364 327 232 207 368 221 220 175 3178
Atos 40 153 143 80 29 38 79 9 101 11 7 7 697
i10 0 0 0 0 0 0 215 410 80 0 80 105 890
Sutera 103 52 51 77 72 0 0 232 39 8 12 8 654
Picanto/Suria 277 182 194 240 361 396 346 207 239 139 120 90 2791
Viva 5156 4232 5142 6088 5681 6597 7440 6506 6294 4379 4880 5178 67573
Smart 11 6 4 2 0 0 0 0 0 0 0 0 23
Forza 16 15 14 36 91 0 0 219 49 23 18 4 485
Others 15 3 10 5 6 1 3 1 0 1 0 0 45
Monthly Total 7339 5888 6830 7879 7411 8263 9364 8752 8034 5416 6116 6116 87408

Table 3
Registered Sales of Cars in the “A” Segment for 2009
2009
Model Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Viva 4373 5200 6007 15580
SEGMENT A

Kancil 277 364 595 1236

Savvy 180 138 171 489
Kenari 166 200 235 601
Picanto/Suria 91 92 160 343
i10 54 95 223 372
Atos 17 24 24 65
Forza 10 9 11 30
Others 2 12 3 17
Monthly Total 5170 6134 7429 0 0 0 0 0 0 0 0 0 18733

This data shows the sales of A-segment cars in 2007 through to 2009. A segment cars are
defined as the small cars such as the Perodua Kancil, Proton Savvy and Naza Sutera.
Typically the engine sizes of these cars are below 1.3 litres.

UNITAR E-JOURNAL Vol. 6, No. 2, June 2010 94

Table 4
Registered Sales of Cars in the “B” Segment for 2007
2007
Model Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Wira 1766 1459 1327 939 1104 2467 2896 2428 1300 883 638 441 17648
Iswara 1695 1319 3567 3522 4432 3673 3869 5537 4572 4112 3832 3475 43605
Satria/Neo 652 770 756 504 366 466 622 596 468 413 356 286 6255
Putra 0 0 0 0 0 0 0 0 0 0 0 0 0
Ascend 0 0 0 0 0 0 0 0 0 0 0 0 0
Espri 0 0 0 0 0 0 0 0 0 0 0 0 0
Cooper 6 5 2 16 22 7 13 23 9 24 12 50 189
Rio 7 20 17 11 8 10 10 8 9 7 4 8 119
SEGMENT B

Getz 486 277 308 100 86 601 238 269 230 340 405 243 3583
Jazz 81 77 101 60 95 71 68 124 96 70 53 32 928
C3 0 0 0 0 0 0 0 0 0 0 0 0 0
Swift 139 108 76 39 114 52 188 320 318 290 296 214 2154
206/Bestari 97 141 68 82 106 88 76 58 56 67 38 45 922
Accent 101 96 97 117 81 80 66 87 84 108 51 46 1014
Aveo/Notchback 27 29 25 58 79 15 8 8 3 7 3 0 262
Myvi 6704 6454 7453 6469 7264 8040 7830 7640 7072 6727 7216 5837 84706
Yaris 36 46 49 50 41 44 48 42 39 14 26 24 459
Colt 4 2 26 21 6 4 7 2 0 1 0 0 73
Sephia 0 0 0 0 0 0 0 0 0 0 0 0 0
Punto 0 0 0 0 0 0 0 0 0 0 0 0 0
March 0 0 0 0 0 0 0 0 0 2 1 0 3
A160 0 0 0 0 0 0 0 0 0 7 6 7 20
Others 2 0 5 9 9 4 9 9 16 10 0 5 78
Monthly Total 11803 10803 13877 11997 13813 15622 15948 17151 14272 13082 12937 10713 162018

Table 5
Registered Sales of Cars in the “B” Segment for 2008
2008
Model Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Myvi 8354 6663 7157 7530 7386 7185 8450 6515 8489 6500 7267 6729 88225
Iswara 3715 2371 2360 1375 435 142 14 21 11 6 2 2 10454
Wira 342 229 185 170 85 71 241 318 183 143 133 55 2155
Satria/Neo 263 258 253 408 425 263 239 347 501 234 339 316 3846
SEGMENT B

Saga 276 3269 5605 6173 6028 6180 7335 6275 7634 5861 6263 5634 66533
Getz 349 211 330 117 155 126 160 310 305 26 101 123 2313
Jazz 38 48 52 61 55 47 59 107 182 90 70 59 868
Swift 334 248 314 381 357 365 358 346 392 267 265 189 3816
Bestari 36 33 30 38 63 0 0 166 52 46 28 84 576
Accent 55 31 29 30 47 17 16 32 45 55 45 39 441
Yaris 21 15 12 15 9 9 9 13 11 18 7 5 144
Cooper 16 13 12 12 15 22 18 25 17 28 13 12 203
Rio 7 7 13 9 5 4 2 4 5 4 2 0 62
SX4 58 43 27 61 42 75 92 29 81 60 45 57 670
Others 4 0 13 40 55 50 27 18 24 20 13 7 271
Monthly Total 13868 13439 16392 16420 15162 14556 17020 14526 17932 13358 14593 13311 180577

Table 6
Registered Sales of Cars in the “B” Segment for 2009
2009
Model Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Myvi 7049 6435 7454 20938
Saga 5054 5015 5671 15740
Satria/Neo 288 231 277 796
SEGMENT B

Swift 228 191 297 716

Bestari 202 258 428 888
Getz 111 128 182 421
Jazz 70 56 111 237
Accent 29 24 29 82
Cooper 15 12 14 41
Yaris 5 8 1 14
Rio 5 4 0 9
Others 104 239 182 525
Monthly Total 13160 12601 14646 0 0 0 0 0 0 0 0 0 40407

UNITAR E-JOURNAL Vol. 6, No. 2, June 2010 95

This data shows the sales of B-segment cars in 2007 through to 2009. B-segment cars are
defined as the medium sized sedans and hatchbacks such as the Perodua Myvi, Proton Saga,
Honda City and Toyota Vios. Typically the engine sizes of these cars are above 1.3 litres but
below 1.8 litres. This is the second largest segment in the Malaysian TIV, after segment D.

Table 7
Registered Sales of Cars in the “C” Segment for 2007
2007
Model Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Waja 1357 995 1093 924 635 1092 1207 970 1005 932 985 875 12070
City 895 945 693 751 1032 618 812 858 880 661 820 742 9707
Civic 1100 786 712 616 976 747 829 1025 857 562 530 551 9291
Sentra 399 406 429 381 345 333 316 342 345 268 186 175 3925
Altis 193 138 187 149 166 272 283 379 460 475 330 42 3074
Focus 51 53 26 19 15 10 0 0 11 13 11 7 216
Lynx 0 0 0 0 0 0 0 0 0 0 0 0 0
Xsara 0 0 0 0 0 0 0 0 0 0 0 0 0
406 0 0 0 0 0 0 0 0 0 0 0 0 0
SEGMENT C

Spectra 156 99 67 69 108 110 125 139 86 120 76 70 1225

Vios 2089 1660 1959 1768 1830 2126 2482 1424 40 1018 3103 3252 22751
Gen2 1186 1024 968 750 587 663 752 692 710 1646 1062 679 10719
Elantra 21 32 31 26 23 22 14 7 10 24 30 0 240
Optra 32 35 30 231 485 97 22 9 2 2 2 0 947
Mazda 3 15 13 25 37 29 32 28 26 16 22 27 7 277
Lancer 13 23 94 18 9 1 3 1 3 1 11 0 177
Lancer GT 0 0 0 0 0 0 0 105 38 46 107 86 382
C4 0 0 0 0 0 0 0 0 0 0 0 0 0
Golf 0 43 19 25 37 37 42 46 33 22 37 24 365
Persona 0 0 0 0 0 0 0 930 4505 4539 4364 3995 18333
Matrix 106 211 382 156 112 528 269 388 479 322 690 176 3819
Latio 0 0 0 2 0 88 567 630 523 312 328 241 2691
MC Accent 0 0 0 0 0 0 0 0 0 0 0 51 51
Others 1 19 10 8 4 15 15 23 14 20 47 19 195
Monthly Total 7614 6482 6725 5930 6393 6791 7766 7994 10017 11005 12746 10992 100455

Table 8
Registered Sales of Cars in the “C” Segment for 2008
2008
Model Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Waja 775 527 535 999 974 1047 917 365 288 137 333 512 7409
Persona 4146 3130 3367 4356 3399 3530 3993 3697 4452 2495 2628 3117 42310
Vios 3336 2152 2779 2682 2649 2978 3045 2982 2420 2439 2642 2606 32710
Gen2 784 521 339 426 314 219 264 216 277 144 241 398 4143
City 985 674 1049 776 1072 1285 1064 643 698 554 557 386 9743
Civic 996 650 727 685 698 776 849 872 726 394 723 526 8622
SEGMENT C

Sentra 156 142 228 260 259 154 136 105 169 146 157 120 2032
Spectra/5 68 43 42 50 48 100 105 41 133 176 225 259 1290
Altis 4 0 327 939 862 960 900 468 508 397 390 524 6279
Lancer/ GT 164 140 99 100 102 147 202 222 163 74 70 51 1534
RS Lynx/Focus 20 26 5 15 26 8 5 25 0 33 3 3 169
Matrix 891 156 213 125 139 218 20 56 467 77 63 104 2529
Mazda 3 34 10 9 8 4 4 39 13 16 7 24 3 171
Elantra 36 94 67 89 79 72 57 38 39 26 12 14 623
Golf 26 39 38 37 32 38 24 17 19 8 14 22 314
Latio 334 308 344 367 390 388 350 151 219 187 143 205 3386
MC Accent 117 65 69 89 115 108 67 61 58 46 38 43 876
Sylphy 0 0 0 0 0 70 512 438 308 250 194 150 1922
Others 28 18 43 46 24 31 43 49 115 27 32 54 510
Monthly Total 12900 8695 10280 12049 11186 12133 12592 10459 11075 7617 8489 9097 126572

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 Table 9
Registered Sales of Cars in the “C” Segment for 2009
2009
Model Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Waja 290 317 260 867
Persona 3271 2977 3334 9582
Vios 1692 1915 2444 6051
Gen2 480 271 170 921
City 1737 1737 2344 5818
Civic 1.8 448 233 277 958
Civic 2.0 286 136 194 616
Civic Hybrid 0 1 37 38
Sentra 145 142 170 457
SEGMENT C

Spectra/5 290 145 170 605

Altis 1.6 82 42 59 183
Altis 1.8 180 190 267 637
Lancer/ GT 73 34 33 140
Optra 25 36 44 105
Matrix 169 60 118 347
Mazda 3 7 12 10 29
Elantra 31 14 24 69
Golf 31 30 67 128
SX4 72 64 82 218
Latio HB 82 83 109 274
Latio S 136 65 100 301
MC Accent 45 40 43 128
Sylphy 175 162 207 544
Others 33 100 66 199
Monthly Total 9780 8806 10629 0 0 0 0 0 0 0 0 0 29215

This data shows the sales of C-segment cars in 2007 through to 2009. C-segment cars are
defined as the upper medium sedans and hatchback cars such as the Proton Persona,
Toyota Altis and Honda Civic. Typically the engine sizes of these cars are above 1.3 litres and
below 2.0 litres. Note that there is a very wide range of on-the-road (OTR) prices of the cars
in this segment.

Table 10
Registered Sales of Cars in the “D” Segment for 2007
2007
Model Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Camry 58 190 1220 752 607 863 849 1054 960 979 1099 892 9523
Accord 374 292 161 184 160 172 179 193 246 254 188 347 2750
Perdana 165 420 412 229 234 226 252 142 140 270 259 400 3149
SEGMENT D

Cefiro 16 6 17 7 9 9 29 7 16 14 16 17 163
Optima 20 26 19 7 17 17 13 26 25 35 11 19 235
C5 0 0 0 0 0 0 0 0 0 0 0 0 0
Sonata 51 120 53 66 96 157 37 22 22 43 23 23 713
Mazda 6 3 10 8 7 13 11 4 7 5 5 11 5 89
Picasso 8 0 0 0 0 0 0 0 0 0 0 0 8
Passat 0 22 8 7 4 9 10 12 11 8 9 5 105
Jetta 0 1 0 0 0 2 1 3 3 1 1 2 14
Others 1 7 7 12 6 6 10 0 0 0 0 0 49
Monthly Total 696 1094 1905 1271 1146 1472 1384 1466 1428 1609 1617 1710 16798

Table 11
Registered Sales of Cars in the “D” Segment for 2008
2008
Model Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Camry 922 881 1452 1415 1149 1192 1305 904 995 855 782 922 12774
Accord 370 149 34 319 1257 733 995 939 851 593 743 366 7349
SEGMENT D

Perdana 202 127 185 134 116 80 95 199 227 163 120 104 1752
Sonata 37 25 20 30 22 18 12 6 13 5 13 5 206
Cefiro 63 14 13 18 10 1 6 4 1 10 2 0 142
Optima 29 17 16 19 14 18 8 44 14 12 13 6 210
Passat 11 6 13 10 7 11 8 9 3 3 4 4 89
Jetta 2 2 2 1 2 4 3 1 3 0 0 1 21
Mazda 6 8 5 7 3 9 14 33 38 24 33 38 10 222
Others 0 2 0 0 0 0 0 41 0 24 32 39 138
Monthly Total 1644 1228 1742 1949 2586 2071 2465 2185 2131 1698 1747 1457 22903

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Table 12
Registered Sales of Cars in the “D” Segment for 2009
2008
Model Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Camry 441 369 656 1466
Accord 804 422 479 1705
SEGMENT D

Perdana 157 118 127 402

Sonata 8 3 5 16
Cefiro 21 0 0 21
Optima 5 9 12 26
Passat 5 16 5 26
Jetta 3 3 0 6
Mazda 6 15 35 12 62
407 19 29 41 89
Others 0 0 0 0
Monthly Total 1478 1004 1337 0 0 0 0 0 0 0 0 0 3819

The data shows the registered sales of cars in the D-segment. This is the luxury sedans and
include the likes of the Toyota Camry and Honda Accord This is the largest segment in the
Malaysian TIV.

Table 13
Registered Sales of Cars in the “MPV” Segment for 2007
2007
Model Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Unser/Innova 342 382 405 451 400 506 665 752 610 468 428 378 5787
ERV/APV 23 25 26 23 29 35 50 24 15 14 10 23 297
Serena 47 40 58 32 36 31 23 37 35 29 27 26 421
Kangoo 28 22 39 61 50 52 40 29 26 10 7 15 379
Scenic 0 1 2 2 0 0 0 0 0 0 0 0 5
Espace 0 0 0 0 0 0 0 0 0 0 0 0 0
Space Gear 0 0 0 0 0 0 0 0 0 0 0 0 0
Evasion 0 0 0 0 0 0 0 0 0 0 0 0 0
MPV below 2000cc

Berlingo 0 0 0 0 0 0 0 0 0 0 0 0 0
Citra/Carens 973 725 565 403 214 776 833 1015 893 948 530 474 8349
Stream 23 35 28 28 32 24 37 36 26 5 16 88 378
C8 1 0 1 1 0 0 0 0 0 0 0 0 3
Premacy 0 0 0 0 0 0 0 0 0 0 0 0 0
Avanza 1.3 780 563 1156 1268 1045 2111 1202 1408 1164 1065 913 923 13598
Avanza 1.5 921 581 792 844 1032 85 1189 1163 948 759 1265 1010 10589
Nabira 1.8 0 0 0 0 0 0 0 0 0 0 0 0 0
Trajet 7 39 63 33 30 147 4 0 0 0 0 0 323
Multipla 0 0 0 0 0 0 0 0 0 0 0 0 0
Ulysse 0 0 0 0 0 0 0 0 0 0 0 0 0
Scorpio 8 6 8 8 6 0 3 2 0 0 2 0 43
Mazda 5 21 11 16 8 14 7 14 14 27 32 13 13 190
Wish 128 134 94 64 58 0 83 101 130 94 47 37 970
Livina 1.6 0 0 0 0 0 0 0 0 0 0 0 97 97
Livina 1.8 0 0 0 0 0 0 0 0 0 0 0 74 74
VW Touran 0 1 0 0 0 0 0 0 0 0 0 0 1
MPV above 2000cc

Odyssey 4 10 9 6 6 9 10 5 10 7 5 5 86
Ria/Carnival 208 175 96 133 697 206 189 199 234 339 191 159 2826
Nabira 2.2 0 0 0 0 0 0 0 0 0 0 0 0 0
Stavic 6 4 4 1 1 3 3 1 1 0 17 0 41
Previa/Estima 1 1 0 0 1 0 0 0 0 1 0 0 4
Grandis 1 2 67 6 7 0 3 0 1 37 15 22 161
Others 0 0 0 0 1 1 0 2 12 2 1 1 20
Monthly Total (MPV) 3522 2757 3429 3372 3659 3993 4348 4788 4132 3810 3487 3345 44642

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Table 14
Registered Sales of Cars in the “MPV” Segment for 2008
2008
Model Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Avanza 1.3 1091 744 857 984 955 931 933 865 997 773 584 471 10185
Avanza 1.5 1028 886 1035 1016 1083 1007 832 749 929 658 622 786 10631
Citra 540 456 495 594 570 472 478 419 537 217 226 207 5211
MPV below 2000cc

Rondo 0 0 0 0 0 0 0 0 71 147 192 164 574

Innova 532 399 440 465 449 674 559 490 337 269 375 428 5417
Wish 28 28 45 52 39 32 60 32 49 21 31 40 457
Serena 27 10 14 36 40 44 38 30 25 40 35 29 368
Kangoo 11 5 6 12 7 10 0 0 10 0 2 1 64
APV 8 5 2 0 3 0 0 0 0 0 0 0 18
Stream 99 31 207 231 158 105 172 112 160 55 62 54 1446
Mazda 5 13 11 4 1 4 3 20 19 14 10 10 9 118
VW Touran 0 0 1 0 0 0 0 0 0 0 1 1 3
Rush 0 0 0 756 731 808 619 376 422 230 335 368 4645
Livina 1.6 458 805 609 459 333 415 596 623 860 537 468 410 6573
Livina 1.8 268 401 447 371 562 571 636 830 413 405 289 240 5433
Ria 170 141 145 169 170 134 98 79 88 40 51 73 1358
Stavic 0 0 0 0 0 0 0 0 4 2 0 0 6
MPV above
2000cc

Odyssey 0 3 9 6 5 2 2 4 8 0 4 1 44
Previa/Estima 0 0 0 0 0 2 0 0 0 1 1 1 5
Grandis 61 31 80 76 87 63 64 32 65 31 53 28 671
Cherry Eastar 0 0 0 0 0 0 0 0 60 76 162 165 463
Others 0 1 19 7 1 1 3 0 7 7 1 7 54
Monthly Total (MPV) 4334 3957 4415 5235 5197 5274 5110 4660 5056 3519 3504 3483 53744

Table 15
Registered Sales of Cars in the “MPV” Segment for 2009

2009
Model Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Avanza 1.3 310 401 462 1173
Avanza 1.5 614 641 870 2125
MPV below 2000cc

Citra 164 144 535 843

Rondo 194 112 136 Source: MAA Sales Report, gained from 442
Innova 285 361 364 Marketing Dision, Proton Holdings Berhad 1010
Wish 15 11 13 39
Serena 35 23 39 97
Stream 52 39 111 202
Mazda 5 40 27 21 88
Rush 183 144 278 605
Livina 1.6 482 551 579 1612
Livina 1.8 280 514 432 1226
Ria 77 43 138 258
2000cc
above
MPV

Grandis 65 40 56 161
Cherry Eastar 159 93 106 358
Others 1 8 8 17
Monthly Total (MPV) 2956 3152 4148 0 0 0 0 0 0 0 0 0 10256

This data shows the sales of MPV-segment in 2007 through to 2009. The MPV segment is
defined as a people mover or multi-purpose vehicle. It is the fastest growing segment in
Malaysia due to the affordability of these vehicles as well as the choices available. The newly
launched Exora will face competition from the soon-to-be launched Perodua MPV later in the
year. Engine sizes for this segment are typically 1.6litres and above.

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Table 16
Registered Sales by OEM for 2007
Registered Sales by OEM
2007
OEM Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
PERODUA 10950 10592 12542 10727 13028 16750 15562 15796 14355 13493 13539 13679 161013
PROTON 7745 6709 8655 7193 7584 8875 10068 12020 13282 13225 11817 10448 117621
TOYOTA 4548 3695 5862 5346 5180 6007 6801 6323 4351 4873 7211 6558 66755
HONDA 2477 2145 1704 1645 2301 1641 1935 2241 2115 1559 1612 1765 23140
NISSAN 462 452 504 422 390 461 935 1016 919 625 558 630 7374
INOKOM 920 598 985 455 861 1302 891 837 819 677 1096 653 10094
NAZA 2338 1888 1370 1157 1838 1718 1746 1825 1591 1759 1067 1025 19322
MITSUBISHI 18 27 187 45 22 5 13 108 42 85 133 108 793
DAIHATSU 0 0 0 0 0 0 0 0 0 0 0 0 0
SUZUKI 162 133 102 62 143 87 238 344 333 304 306 237 2451
ISUZU 0
MERC 363 278 419 406 375 319 306 313 288 319 340 386 4112
HYUNDAI 180 287 244 242 230 406 121 116 116 175 104 120 2341
HICOM 0
BMW 184 146 205 357 203 123 265 298 324 358 260 462 3185
KIA 183 145 103 87 133 137 148 173 120 162 91 97 1579
FORD 59 59 34 27 21 10 3 2 11 13 13 7 259
HINO 0
CHEVROLET 59 64 55 289 564 112 30 17 5 9 5 0 1209
MAZDA 39 34 49 52 56 50 46 47 48 59 51 25 556
VOLKSWAGEN 0 67 27 32 41 48 53 61 47 31 47 31 485
VOLVO 78 47 46 49 61 59 34 54 55 46 35 55 619
OTHERS 69 77 112 126 127 157 133 114 116 83 119 79 1312
TOTAL 30834 27443 33205 28719 33158 38267 39328 41705 38937 37855 38404 36365 424220

Table 17
Registered Sales by OEM for 2008
Registered Sales by OEM
2008
OEM Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
PERODUA 14961 11907 13373 14684 13885 14779 17045 14116 15698 11532 12937 12476 167393
PROTON 10824 10693 13049 14353 12160 11878 13357 11659 13952 9413 10297 10323 141958
TOYOTA 8153 6707 9327 9851 9214 10009 10051 8288 7760 6993 7499 8009 101861
HONDA 2909 1856 2516 2503 3673 3309 3511 3086 3126 1934 2456 1598 32477
NISSAN 2183 2307 2353 2577 2725 2780 3146 3157 2813 2391 2261 1951 30644
INOKOM 1410 604 746 475 359 333 276 430 960 167 208 334 6302
NAZA 1198 944 971 1198 1368 1030 949 1336 1122 640 653 651 12060
MITSUBISHI 682 533 619 707 680 709 1056 894 955 646 721 653 8855
DAIHATSU 453 282 426 518 516 475 614 494 475 399 396 358 5406
SUZUKI 412 351 390 491 447 511 502 411 515 349 350 295 5024
ISUZU 367 300 348 474 420 378 542 477 581 406 441 525 5259
MERC 362 307 371 402 350 370 533 365 342 486 370 379 4637
HYUNDAI 255 252 193 318 307 507 412 668 386 164 273 207 3942
HICOM 243 264 390 429 348 420 503 438 392 378 371 356 4532
BMW 238 325 280 321 370 395 310 326 320 377 133 320 3715
KIA 207 160 172 188 173 247 262 188 233 245 382 367 2824
FORD 189 195 189 114 110 78 51 103 122 241 178 127 1697
HINO 181 206 226 179 314 260 295 229 321 297 288 207 3003
CHEVROLET 111 48 74 95 76 69 41 54 71 44 42 37 762
MAZDA 92 60 67 63 43 68 123 92 121 75 134 47 985
VOLKSWAGEN 71 72 102 92 67 88 81 70 68 36 46 111 904
VOLVO 58 65 84 70 98 76 69 94 73 70 62 42 861
OTHERS 269 149 170 177 228 221 255 252 323 229 367 452 3092
TOTAL 45828 38587 46436 50279 47931 48990 53984 47227 50729 37512 40865 39825 548193

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Table 18
Registered Sales by OEM for 2009
Registered Sales by OEM
2009
OEM Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
PERODUA 11876 12216 14298 38390
PROTON 9874 9317 10198 29389
TOYOTA 4844 5372 7127 17343
HONDA 3815 2919 3904 10638
NISSAN 2285 2389 2445 7119
INOKOM 348 316 585 1249
NAZA 750 666 1416 2832
MITSUBISHI 585 457 670 1712
DAIHATSU 312 257 312 881
SUZUKI 360 283 415 1058
ISUZU 323 370 369 1062
MERC 303 277 380 960
HYUNDAI 203 145 203 551
HICOM 322 221 345 888
BMW 294 270 284 848
KIA 381 237 289 907
FORD 93 131 131 355
HINO 257 188 246 691
CHEVROLET 67 57 70 194
MAZDA 77 130 65 272
VOLKSWAGEN 82 98 95 275
VOLVO 62 39 58 159
OTHERS 288 320 300 908
TOTAL 37801 36675 44205 0 0 0 0 0 0 0 0 0 118681

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