Malaysia Car Industry Essay Example For Students

Malaysia Car Industry Essay 1.0MALAYSIA CAR INDUSTRY1.1 BackgroundMalaysia is one of the smaller Southeast Asian markets for motor vehicle production and sales and ranks behind South Korea, the Peoples Republic of China, Taiwan, Thailand and Indonesia. Since 1985, when the first made-in-Malaysia car, Proton rolled off the production line, it have been spearheading Malaysias ambitious plan to become one of the worlds most advanced industrial societies by the year 2020. To date over one million Protons have been sold in 51 countries throughout the world. By contrast, Malaysias motor vehicle industry actually remains heavily protected with import duties ranging from 140 to 300 percent on cars, and very high local content requirements. Malaysia also maintains an import ban on motor vehicles from Israel and South Africa. These protectionism clause in large has made Proton to became the number one best selling passenger car in Malaysia. It has also maintained a huge market share of over 50% since 1987 from it infancy beginnings in 1985. 1.2 Market Review Year 1998Position Makes Sales UnitShare1Proton ( EON )6759549.5%2Kancil3892128.5%3Proton ( USPD )1989414.6% 4Honda4100 3.0%5Toyota1930 1.4%6Nissan1407 1.0% 7Mercedes Benz1160 0.9%8BMW 672 0.5%9Volvo 422 0.3% 10Peugeot 350 0.3%Total Passenger Car136451100%1.3 The Proton StoryIn 1983, the Malaysian government formed Proton (Perusahaan Otomobil Nasional) a 70/30 joint venture between the Malaysian government and Mitsubishi. Assembly of its first national car, the Proton SAGA, began in 1985. The SAGA contained 70 percent local content in the beginning, with plans to increase this eventually to 90-95 percent. Currently the Proton is between 60 and 62 percent local content according to GSP criteria. Product Launch 1985 Proton SAGA 1.3 and 1.5 litre 1992 Proton ISWARA 1.3 and 1.5 litre 1993 Proton WIRA 1.5 and 1.6 litre 1994 Proton SATRIA 1.3 and 1.6 litre 1995 Proton PERDANA 2.0 litreProton WIRA 1.3, 1.8 litre and 2.0 diesel ( new generation ) 1996 Proton TIARA 1.1 lit re 1997 Proton PUTRA 1.8 DOHC 1998 Proton SATRIA GTi 16VProton PERDANA V61.4 EON ( Proton Leading Car Distributor )EON, a member of the DRB-Hicom Group, was established on 16 May 1984 as the sole distributor of Proton cars. On 1 September 1985, it marketed the first Proton Saga, and thenceforth there was no looking back. As the leading distributor for Proton cars in Malaysia, it has also became one of the nations fastest emerging group. Sales volume increased rapidly from 7,494 units in 1985 to 140,968 units in 1997, averaging an annual growth rate of 18.7 per cent. For the financial year ended 31st December 1998, the group recorded a turnover of RM 3.95 billion with a pretax profit of RM 101.6 million. 2.0 CHANGES IN THE CAR INDUSTRYIn Malaysia, for the last 10 years, the car industry was practically taken over by Proton brand. Of the vehicles sold annually, 70 percent are Proton sales. Some 25 other manufacturers compete for the remaining 30 percent. The previous best selling car like Nissan Sunny was totally wipe out almost overnight since Proton huge takeover in market sales more than 10 years ago. Over the next decade, the Malaysian Proton vehicle market is expected to increase close to 90 percent from 230,000 units at present to approximately 375,000 units in the year 2000. 3.0 HOW PROTON REMAIN NO.13.1 Marketing-Mix StrategiesThe most basic marketing-mix tool as in Product, Proton offers unquestionably the best warranty package of any manufacturer. The most important part being the power train warranty, which guarantees the engine and transmission assemblies against failure for six years. The next most aggressive marketing-mix tool in Proton sales is Promotion and Place. Proton through EON as distributor has been able to undertake to communicate effectively and promotes its product to the target market. It has set up communication and promotion programs extensively consisting of advertising, sales promotion, public relations, and direct and online marketing. The very first promotion Proton used was to organized the car naming contest, and it was from here that a certain brand belonging patriotism towards Proton SAGA name was instill among Malaysian. The government itself also relentlessly pursue the promotion of Proton car on a nation wide scale with the Prime Minister launching almost every new model category in the Proton car lineage. This itself has been widely covered in all major newspaper for the benefit of market brand awareness. As in recently the Prime Minister as a prime mover in promoting Proton cars have launched numerous world events namely, the World Cup Golf 99, and Le Tour De Langkawi, awarding a Proton car to its winner. The recent achievement of Malaysian athletes who had set and broken records in Kuala Lumpur 98XVI Commonwealth Games was also not forgotten, as the athletes were each awarded a Proton PERDANA. Besides this Proton through its marketing arm EON, have also been sponsoring world events to promote the car namely, FIFA/Coca Cola IXth World Youth Club, 34th International Youth Skill Olympics, Motor Rallying Activities and the Malaysia Thomas Cup team to restore the badminton glory. These intensive promotions especially at world functions have nevertheless promoted Proton cars to a vast majority of people in Malaysia as well as overseas. Hate Crimes EssayThe Proton was supposed to be an affordable car for the average Malaysian. With its entry into the Malaysian market more than 10 years ago, within a few months taxes on foreign low cost cars (like the fantastic Sunny Extra) was increased putting it out of reach of most Malaysians. It became the best selling cars ever due to unfair advantage. Not that it was of high quality, it does not meet the minimum standards required by, say UK, Australia. When one looks at the broader picture, Proton is a miserable failure. It has made cars less affordable for the average Malaysian. It has given the Malaysian consumer less choice when buying a new car. It has made EON, a non-company prior to the existence of Proton, THE most powerful car dealership in Malaysia, despite consistent complaints of poor customer service. And, as you say, it has given Malaysians a poorer quality car than they could have bought for the same money before the import tariffs were imposed. The justificat ion for the protections that Proton enjoys is called the infant industry argument. Simply said, as a new industry Proton needs an extra edge to compete against imports. Tariffs on imported cars increase their prices making Proton cars more price attractive. Nevertheless, tariff on imports should be gradually lowered to keep Proton awake. Now that Proton is so very popular and such a great car, the government still cant afford to take off the tariffs on other cars. If people have already realized that the PROTON is a good car (as claimed), then it does not need to be protected. It is past the fledgling stage and now must learn to stand on its own feet. Let EON enter a free marketplaceIf it is truly good, it will survive, otherwise it will DIE. This will not happen until 2003. when the Asian Free Trade Area (AFTA) takes full effect. 5.0MARKETING ANALYSIS5.1 SWOT AnalysisStrength Identified1. Well-trained sales/service force conformance to the needs of customers. 2. Wide distribution centres. 3. Efficient production reduces the cost and reasonable price to give value to the product. Weaknesses Identified 1. Long delivery schedules. 2. Customer claims. Opportunities Identified1. Effective distribution. 2. Lower to Medium class cliente market share. 3. Currently monopoly of trade. 4. Marketing communication. 5. Variety models to attract customers. Threats Identified1. AFTA . in the year 2003. 6.0CONCLUSION I believe 90% of Proton buyers choose Proton over the imports because of price. Once you lift the tariff as it will be in 2003, you 1) loose the cash flow from the tariff 2) loose tremendous market share for the Proton. Therefore, the car market industry which has been monopolize by Proton will certainly change in the next 3 years to come. No doubt, anyone could live with a Proton (lived with one for over 5 years), but I dont think its manys dream car except for the the price feature. Proton future may go on but it certainly will not be the No. 1 car after the year 2003. When AFTA is in force (in the year 2003), most of the other car prices will also be down. AFTA pushes for liberation of trade in the region through the elimination of intra-regional tariffs and the elimination of non-tariff barriers. Then Proton will have to compete with the same equal concept for market share. It is popular because it is the cheapest car in Malaysia. It is the cheapest after they impos e 300% tax on import cars. Proton marketing strategy is generally built upon this low price distinctive difference to maintain as No. 1.