Automotive

Published on August 22nd, 2018 | by Subhash Nair

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What IS the Point of a 3rd National Car Project?

Proton and Perodua are sources of Malaysian pride. Right? Well, I mean, I am glad they exist. But they’re not the first thing I mention about my country. In fact, if you have to EXPLAIN that your country has its own cars, you’ve already defeated the purpose of having a national car. If our cars are not world renown for something, they’re really nothing to be beaming with pride about. Yes, they’re both great car companies, but outside of Malaysia and outside of car enthusiast circles, they’re really quite obscure.

In fact, I think more Australians are aware that many of their cars are assembled in Thailand than they are of our car brands. Are Thai people less patriotic than Malaysians? No. The car lack of Thai car brands never got in the way.

So, if it took 20 years to realise that national car brands don’t really bring a sense of national pride, why announce yet another “national car project”? Well, we have a couple of guesses, and neither of them relate to pure patriotism.

Asserting Authority Over the Industry Players

The automotive industry is an important one to the Malaysian market. Hundreds of millions of Ringgit flow out of the country for imported cars. But also tens of thousands of jobs, many of which are high paying come to Malaysians. Thousands of local OEMs, a whole ecosystem of businesses depend on it.

Where there is money flowing, there are bound to be a few key players with a lot of power, money and influence.

Threatening a new national car puts a lot of the companies involved in the industry at the mercy of the new government in a whole new way. None of the current players want a new competitor. What’s worse, if that new competitor is produces high-tech vehicles AND gets tailor-made incentives, it will have the ultimate competitive edge.

So, if the government pursues this plan and it comes to fruition, they’ll may end up having a nice new market segment carved out for its guaranteed success.

If the government pursues this plan but nothing comes to fruition, they can use the idea to bargain with the industry players. Yes, they’ll all want to play nicely with the new government. But by showing just how bad they can make it for the others, they may have the entire industry playing to their tune, in full and absolute control.

Stopping the outflow of cash

The premium segment, with local assembly and hybrid incentives has seen unimaginable growth in our somewhat stagnant economy over the last 5 years. While everyone enjoys a nice new car for a better than usual price, every car you buy from a premium European marque sends money into Europe’s coffers.

Now, yes. CKD operations are good because create jobs and tech transfer and the investment trickles down. But in order for real jobs and real tech transfer to occur, the I.P. must belong to a Malaysian entity. More engineering jobs and management roles need to go to Malaysians. A third national car in the form of Lynk & Co might fulfill this role.

Assessing Diplomatic Ties

If the new government is going to get soft loans and big projects from other countries like Japan or China, a new car project might be a good way for them to assess who will give them the best long term deal. Since they’re also discussing co-operation with Indonesia for the project, it could also be used to see how willing our neighbours are to some teamwork.


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