GM’s Thai unit signed a memorandum of understanding with Naza to distribute the cars and parts in Malaysia, which is one of the largest passenger car markets in Southeast Asia. Naza, which began as a luxury car importer using the Approved Permits (AP) system utilized in Malaysia, said further announcements of the partnership details will be made known after the agreement is formalised.
DRB-Hicom last month confirmed long-standing rumours that it would stop distributing Chevrolet in Malaysia. The statement said that DRB and GM Asia Pacific have mutually agreed to discontinue their existing joint venture agreement to import and distribute Chevrolet vehicles from 1st January, 2010 and this will see the winding down of joint venture company Hicom-Chevrolet Sdn Bhd, which was founded in August 2007. GM and DRB-Hicom hold 51 per cent and 49 per cent stake in the joint venture, respectively. DRB-Hicom through its subsidiary DRB-Hicom Auto Solutions was responsible for importing the vehicles into Malaysia while GM was in charge of the management and operations of the business.
From what I see, the Chevrolet brand in Malaysia wasn’t strong in the first place. When it first appeared in the country it was distributed by another subsidiary of DRB and at that point of time, prices were thrown so that people would buy the car. Discounts of up to RM20,000 were given and this in turn led to heavy depreciation in used car prices. Those that had bought earlier basically had minor heart attacks as their car’s value slumped. Then GM itself came in and entered into a JV company. This did not go too well as it is from my observation (and also lots of business analysts) that the DRB comglomerate, since the takeover by the Malaysian tycoon Tan Sri Syed Mokhtar Al-Bukhari have actually lessened their focus towards the automotive industry. Profits from Automotive dropping from 60% to approximately 40% over the past few years. As such, less popular brands like Chevrolet suffer.
The Naza group currently holds the distribution rights to Ferrari, Maserati, Ducati, Peugeot and Kia to name a few. You’d then realize that there is an overlap in the types of cars produced in Malaysia by Kia, Chevrolet and in some ways, Peugeot. For example, if we take the basic 1.6 sedan we’d see the Kia Forte and the Chevrolet Optra in the same category. We are bound to see similarities between the two and I sometimes wonder how executives of the Hyundai Kia group as well as GM allowing one company marketing both brands.
The only explanation on why GM left DRB for Naza is the assembly of the cars in Malaysia. Since the management of DRB seems to be less focused on the automotive sector and was not willing to locally assemble Chevys, GM dutifully agreed to part ways and chose someone who would. In came Naza which also has manufacturing facilities located in Gurun, Kedah. In chasing economics of scale, i.e more CKD kits assembled in Gurun, the more cost effective a plant is, Naza agreed to bring Chevrolet under its wings.
I don’t know which decision was wiser as it’ll take a really long while for Chevrolet to spread its wings here in Malaysia. This is due to the earlier price dumping as well as the fact that the average Malaysian may be unwilling to try something without first putting resale value as their number 1 priority.