2015 Mkt Share Perodua

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It was mostly good news at Perodua’s 2015 performance review event this morning, where the company revealed that it had sold a record 213,300 vehicles last year, translating to an estimated 32% market share. That slice of the pie (up 3%, highest since 2007) also means that P2 has topped the Malaysian auto sales chart for a full decade. After-sales and accessories divisions also broke internal records.

However, one slide in the presentation stood out because it had a dipping line. Pictured above, it shows that foreign brands have outsold national makes for the second year running, and the share is split 53:47 in favour of the non-nationals, according to Perodua’s estimates (official 2015 sales figures from the Malaysian Automotive Association are not out yet).

The market share decline of national makes is no sudden phenomenon, and is largely due to Proton’s fortunes as Perodua has been relatively consistent in holding around 30% share, and pole position. Proton controlled over half of the domestic market back in 2001, but now commands less than a third of what it used to enjoy.

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Put together, the local players’ share of the market has seen a steady drop over the years, but the point where they surrendered the lead to the non-national makes happened in 2014. Couple this trend with the rise of Honda in 2015 (now the leading foreign brand ahead of Toyota) and you get a shrinking national market share that not even P2’s record sales can arrest.

Observers would say that it’s the inevitable effect of liberalisation. But this trend is not good for the local automotive ecosystem, Perodua argues.

“While we understand the government’s intention to liberalise the automotive industry in the near term, we believe that the country’s automotive eco-system, consisting of local vendors and dealers, as well as original equipment manufacturers like Perodua, has yet to reach a point where we can fairly compete with other established global brands,” P2 chairman Tan Sri Asmat Kamaluddin said the official opening of the Perodua Global Manufacturing plant last week.

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“This is because we have yet to reach the level of maturity, in terms of economies of scale, cost competitiveness and even quality, which other established global brands. If the percentage continues to slide to below 45% then many of the local dealers and vendors may have to cease operations and this will have a negative impact on the economy as a whole,” added Asmat, who is also the group chairman of Perodua stakeholder UMW Holdings Berhad.

The point was reiterated by P2 president and CEO Datuk Aminar Rashid Salleh today. He also revealed that Perodua purchased a whopping RM4.9 billion worth of parts and components from local vendors in 2015, up 26% from 2013, although the total is expected to fall slightly to RM4.6 billion in 2016. All of Perodua’s current models – Axia, Myvi and Alza – have a localisation rate of over 90%.

Perhaps the outspokenness of Perodua’s top brass on this matter stems from the increased “responsibility” on the company to support the local vendors as Proton flounders. Something that isn’t very welcome in the current climate, where forex has impacted the remaining 8-10% of imported components (Axia engine components in USD, Myvi/Alza parts in JPY), negatively affecting profitability by 25-30%. Also, consumers are increasingly opting for lower end variants, where margins are thinner.