15-7-2024 (KUALA LUMPUR) Malaysia’s aspirations to become a leading automotive hub in the ASEAN region are taking a new direction, with industry experts emphasising the critical role of parts and components exports alongside finished vehicles. This strategic shift could be the key to unlocking the country’s full potential in the competitive Southeast Asian automotive market.
Malaysia Automotive, Robotics and IoT Institute (MARii) CEO Azrul Reza Aziz highlighted the importance of this dual approach in a recent interview. “We urge original equipment manufacturers (OEMs) to not only export cars but also parts and components, thereby enhancing the overall competitiveness of the Malaysian automotive industry,” he stated.
The push for increased exports is driven by the need to achieve economies of scale, a crucial factor in reducing production costs and making Malaysian auto parts more price-competitive in the regional market. Currently, Malaysia faces challenges with supply chain costs reported to be 30% higher than China’s and 10% above Thailand’s.
However, Azrul cautioned against broad generalisations, noting that costs can vary significantly based on individual company structures, car models, and supply chain ecosystems. He emphasised the importance of digital transformation and Industry 4.0 technologies in addressing these challenges, particularly as Malaysia aims for carbon neutrality by 2050.
The country’s automotive sector has shown promising growth, with a record high total production volume (TPV) of 775,000 vehicles. Yet, this figure pales in comparison to China’s 30 million and Thailand’s 1.8 million, underscoring the substantial ground Malaysia needs to cover.
Malaysian Automotive Association president Shamsor Zain provided further insights into the competitive landscape. He pointed out that China and Thailand benefit from larger domestic markets and maintenance networks, reducing their reliance on exports and vulnerability to exchange rate fluctuations.
Shamsor advocated for Malaysia to position itself as an export hub to justify the high costs of implementing new technologies in component manufacturing. “The most effective way to justify these investments is for Malaysia to position itself as an export hub,” he asserted.
Both industry leaders agree that expanding export volumes and increasing OEM capacity are crucial steps in building competency in quality, affordability, and productivity for locally produced parts. This strategy aligns with the goal of tapping into ASEAN’s vast consumer base of nearly 700 million people.
