Archive for Thoughts

While reading the NST sometime last week, I spotted this column by Rehman Rashid, on the breakdown of the Proton and Volkswagen talks. It was a very pro-Proton column, but there was this one paragraph…

And then there’s India, home of Mahindra, Maruti, Bajaj and the Ambassador - and a 300 million-strong middle class with fewer than 15 cars per 1,000 people and 10,000km of new toll roads being built. It’s easy to imagine rebadged Perdanas, Gen.2s and Personas in New Delhi, Chennai and Mumbai. Volkswagen or GM can’t build a car for under RM20,000 to match any of them.

Sadly, neither can Proton… not in it’s current state and not for a long time. And neither can many Indian manufacturers! While it’s true that Volkswagen and GM are having troubles building a cheap car at those kind of prices (perhaps why Volkswagen was interested in any kind of tie-up with us at all to begin with, some say Volkswagen wanted the upcoming New Proton Saga to be its new cheapest car positioned under the Volkswagen Fox), I don’t think the Perdana, the GEN2 and the Persona can be produced and sold in India for under RM20,000 either. One only needs to look at the prices of those cars in our local market to know.

So let’s jump back to reality abit shall we? Everyone who cares about the automotive industry, or has a responsibility to say something about the national concern of the week has commented on the Proton-Volkswagen talks, and all of them - including the big man Syed Zainal himself - have been saying China and India are integral parts of Proton’s turn-around plans.

Proton has already made some in-roads in the Chinese market - a rebadging deal with Jinhua Youngman. An interview with Syed Zainal in StarBiz reveals how that deal came about - Jinhua Youngman (a Chinese coach and truck maker) originally went to Lotus and asked them to design a car for them. It was suggested that Jinhua do a badge engineering deal with Proton instead, since the cars were already there. It seems Jinhua Youngman has already managed 1,500 bookings before the car is launched.

But India is a market in which Proton does not have a presence in yet. Is India a perfect match for Proton and the models it has? Rather than just imagine… let’s take an analytical look at the situation in the Indian market.

INDIA: Current Industry Sales Figures and Growth Potential

India has only 12 motor vehicles per 1000 persons, whereas China has 10 and Malaysia has a staggering 641! That makes us the 3rd most saturated country in the world behind the United States (765) and Luxembourg (686). In comparison, Japan has 543 and the United Kingdom has 426. [1]

Admittedly, the term “motor vehicles” also include two wheelers and not just passenger cars, but this is also the case for India. For Financial Year 06-07, 77% of India’s total industry volume comprised of two-wheelers. The remaining comprised of 1,076,408 passenger cars (14%), 220,199 utility vehicles and 83,091 MPVs. This is a huge amount of vehicles, and the 14% figure only stands to grow as many Indians slowly graduate from two wheelers to cars.

The potential is huge considering as India’s GDP goes up, the market for motor vehicles will increase tremendously. According to Global Economics Paper No. 99 by Goldman Sachs [4], China’s GDP would be exceeded Germany by this year, and Japan by 2015 while India would do the same by 2020 and 2030 respectively. Emerging markets that are considered “old news” in the automotive industry include Brazil, Russia and China. These markets are expected to decline in growth from 2015 onwards, while India is expected to continue showing stable growth. [Source]

INDIA: Penetration Potential and Government Policies

The Indian automotive industry is seen to be “friendlier” as compared to the China. According to a Japanese analyst source, many Japanese vendors are now looking for an “India Plan”. More and more are turning away from China because of cases like the much publicized GM vs SAIC legal case over the Chery QQ, allegedly a clone of the Chevrolet Spark.

The Indian government also has initiatives like the National Highways Development Project (NHDP), and has committed RM 274 billion to the NHDP under the 11th Five-Year Plan. Malaysian companies like UEM and IJM are already in India, working on these highways, roads and flyovers. A clear sign that India is serious about improving its country’s transportation.

Of course, the highways are no use without motor vehicles, and for that India has a clear “Automotive Mission Plan” that covers the years 2006 to 2016. This plan was prepared by the Ministry of Heavy Industries and Public Enterprises of the Government of India and outlines automotive industry investments of up to US$40 billion (RM 135 bilion) over the 10 years. The plan also focuses on exprts, with a 25-point plan. While obviously requiring more consistency and notice period before changes are made (manufacturers are asking for a minimum of 2 years before and major alterations are made), the plan gives investors a lot of confidence. There will not likely be any sudden random changes in policies, something that are unfortunately getting familiar with.

From a Malaysian perspective, the legal system could possibly be easier to understand as Malaysia and India were both former British colonies and are still Commonwealth members. Communication would also be easier, in English if the Malaysian/Indian accents dont distort discussions and negotiations. Lastly, as is Japan, Australia and New Zealand, India is a right-hand-drive country whereas China is LHD. This means less re-engineering cost for the new market.

INDIA: The Big Players

Sales Matrix - Indian Passenger Cars for August 2007

Source: Autocar India, October 2007

Above are the sales charts for the Indian passenger car market in August 2007 alone. As you can see, Maruti Suzuki India dominates the Indian market with their Suzuki-badged cars, and the Maruti-Suzuki M800 is just about the only car that is priced under RM20,000 (Rs 2.16 lakh is about RM18,500). Yet it is not the top selling model, which shows that the Indian market is maturing - the 1983 Suzuki M800 is OLD and no one wants to be stuck with a stone age car. They want something fairly modern, and stylish even, but being economical in terms of both fuel consumption and initial purchase cost plays a huge factor.

What Is The Ideal Indian Car?

Like I said, fuel economy and initial purchase cost are huge factors for the current Indian car buyer. Petrol in India costs 49.49 rupees (RM4.07) per liter, and diesel costs 32.45 rupees (RM2.78) per liter. As evident from the top 10 sales list, except for number 9 and 10 which is an MPV and a 4X4 respectively, India needs small cars. It would also be ideal if the car had a diesel powertrain, especially if you want to introduce a larger sedan-bodied model. A diesel variant is a must have if Proton were to enter the Indian market, and from what I hear there are certain Proton prototypes with third party-sourced turbodiesel units already. Manual transmission is a must as Indian motorists seem to want to save every single drop of fuel they can.

The Best Way To Enter India

The obvious way is to tie-up with a company that already has a nationwide sales and service network in India, and a gap in the company’s product line-up which allows Proton models to be slotted in. This will provide Proton a quick entry into India.

Maruti Suzuki is out as they have their own brand to run. Tata may be a good choice, but their mainstay is commercial vehicles, although their Tata 1-lakh car and 2008 Indicar/Indigo plans are interesting, as is their relationship with Fiat. Backtracking to the bit about car prices, 1-lakh rupees is about RM8,563.00, but now it seems the car might end up being 1.25 lakh instead (RM10,700). Both Hyundai and Suzuki are also working on similiar projects. Anyway, Tata has 11 variants of the Tata Indica alone, not including the Indigo, so there is definitely no room for Proton in the Tata stable.

Mahindra looks to be a perfect choice. Yes, they have a relationship with Renault to sell the Renault Logan in India, but many who’ve seen the vehicle says it feels too cheap and is put together too cheaply - this is not really in tune with maturing Indian customer tastes. The Logan’s launch in India also did not go as well as expected - not enough ready stock at launch, too high of a booking deposit, slow production, expensive diesel option, and limited variants. [Source]

Business Times reported back in April 2006 that Proton was in talks with Mahindra. In more recent news, Syed Zainal reveals in the StarBiz centerspread interview that Proton is now talking with a company that is currently in the tractors and 4X4 segment but wants to get into passenger cars. I strongly believe this could be Mahindra. Syed Zainal says the deal will be similiar to the Jinhua/Europestar deal - this could mean rebadging instead of the Proton brand being introduced there.

Where Will The Cars Come From?

CKD assembly in India is the best way to go about it because of tax/duty concerns, and the Indian partner would have a manufacturing, logistics, vendor network and system already in place. A combination of various duties - Excise, Customs, and VAT - could hike up the price of a CBU car imported into India by 60% to 100%, but for CKD pack imports it is generally about 10% only. [Source] But it’s worthwhile to note that India is currently on observer status in ASEAN [Source] - there could be a possibility of India moving to establish Free Trade Agreements with key ASEAN countries in the next few years - it already has an FTA with Thailand.

India has had an installed manufacturing capacity of 1.75 million cars annually since the year 2005, but the Total Industry Volume has not reached that amount yet, so there is plenty of capacity to locally assemble Proton cars there.

The Perfect Proton for India

Syed Zainal mentions in the StarBiz interview that Proton will be offering the BLM, the GEN.2 and the Savvy to the Indian partner. He says with the right product offerings, a car company in the Indian market could snag an estimated combined sales volume of about 200,000 units a year for 2 to 3 cars, which should be possible if one of cars gets onto the top 10 list (refer August 2007 sales table above).

India divides passenger cars into different segments, from A1 to A6. There are four Lower A2 segment cars on the top 10 list - the Suzuki Zen Estilo, the Suzuki Alto, the Suzuki Wagon R and the Hyundai Santro. India defines a Lower A2 segment car as a car between 3490mm and 3650mm in length. Then there is the Upper A2 segment which measures between 3650mm to 4000mm long - represented on the top 10 list by the Tata Indica and the Suzuki Swift. Longer than the Upper A2 segment is the Lower A3 segment, which measures between 4000mm to 4200mm and includes cars like the Ford Ikon and the Tata Indigo, but none of them are on the top 10 best seller list.

By just looking at the types of cars that are on the list, you know you need an excellent Lower A2 or Upper A2 segment contender. Proton has two cars that could fit into what India considers an A2 segment car - the Proton Savvy (3710mm) and the upcoming Proton BLM, which could fall in either the Upper A2 or Lower A3 segments.

If the BLM follows the Persona’s foot steps, it will end up being a rather decent car. I believe if the kinks are ironed out of the Campro’s strange torque curve (through the variable intake module perhaps?), the BLM and a Campro-equipped Savvy could be better cars than cars like the Hyundai Santro (we know this car as the Atos here in Malaysia). Proton has cars with modern styling and up to date interiors. What we don’t have right now is a diesel - one of the lasts bit of the ideal recipe.

Small hatchbacks in India are preferred and retain value better compared to three-box sedan cars. One reason could be because sedans in India are more expensive compared to hatchbacks on initial cost - the opposite of what’s happening in Malaysia and around the world where hatchbacks are seen as a sporty lifestyle choice and command a higher price - just look at the Honda City vs the Honda Jazz here in Malaysia. The other factor is the fact that a smaller hatchback is simply preferred in the very busy streets of Indian towns. A hatch simply takes up less street real estate and parking space.

But this doesn’t mean a small sedan will not work in India. For a case study, we can have a look at the Suzuki Esteem 1.3L, which is about 4095mm x 1575mm x 1395mm in dimension. According to the little guesswork I did which I demonstrated below, the Proton BLM should be nearly equal to the Suzuki Esteem in length - an estimated 3975mm to 4050mm length - (to make up for the angle in the photo) so it could either be an Upper A2 car or a Lower A3 car.

You can try doing your own guess-timation calculation on how long the BLM is - the pixel values above will not tally if you measure the image because I did it with a larger image then resized it down to fit this site. Plus the image is actually taken at an angle so it would not be accurate. I assumed the BLM would use the Savvy’s platform and not an extended one, so the same wheelbase would apply.

It could be that the Suzuki Esteem is not doing that well in India because it appears to be an old workhorse, and is not so palatable compared to the newer Wagon R, Zen Estilo and other “newer” models. The BLM will offer a “fresher” Lower A3 sedan choice.

So to answer the question - what is the perfect Proton for India? In this case, the answer would be the Savvy and the BLM, and priority should be to get the cars locally assembled in India as fast as possible.

But the danger with this could be having the Proton or Proton-badged marque be associated with cheap cars forever - a problem that Maruti Suzuki is facing right now. Competitors like Honda and Toyota took a different approach - enter with the more expensive models to build the brand, then move downmarket with cheaper offerings.

Price point is also something to ponder about - assuming the BLM is RM32,000 here in Malaysia, that would translate to about 3.7 lakh rupees. Seems pricey considering most of the models on the top 10 list start from under 3.0 lakh rupees. But then again as I’ve mentioned before it is normal for sedans to have a premium over hatches in India.

Last but not least, with the possibility of India-ASEAN FTA’s being put into place in the not-too-distant future, it would be very good if Proton develops vendors for specific items in India, to cater to regional or global (if I could be so bold as to use that word) Proton production. It would meet the spirit of the CEPT where countries agree to lower import duties while exchanging a roughly equal value volume of components. An added bonus, to take a page from what the Japanese manufacturers like Toyota and Honda are doing, is to use these ‘roots’ in each country to show evidence to the government that the manufacturer is not just there to make a quick buck but has developed local vendors and is serious in creating export opportunities for the host country and/or state.

A wishlist for India-bound Protons: models must have retractable electric wing mirrors because of the danger of two wheelers accidentally clipping the wing mirrors off. The wing mirror mount should also allow for the mirror to detach easily when forced to break without damaging the car body. Ideally the car body could employ a similiar material to the Nissan X-Trail’s fenders which are dent-proof when it comes to little bumps and knocks. This material could be used in key body parts like fenders, like on the X-Trail. Again, something to cope with the huge amount of two-wheelers there. That way Proton (or Mahindra perhaps, if a rebadging deal is done) can claim the new car is designed for Indian roads.

And of course most importantly, a diesel engine.

SOURCES:
[1]: http://www.nationmaster.com/graph/tra_mot_veh-transportation-motor-vehicles
[2]: http://www.cybersteering.com
[3]: http://www.siamindia.com/scripts/custom-duty.aspx
[4]: http://www2.goldmansachs.com/insight/research/reports/report6.html
[5] http://www.indiaenews.com/business/20060706/13939.htm / Wikipedia: NHDP
[6]: http://news.bbc.co.uk/2/hi/business/5049398.stm

Some of you may have noticed there has been some kind of shift in the prices of import marques in Malaysia, and also the way they are brought in - whether CKD or CBU. We now have CBU Japan imports at never before seen prices: the Mitsubishi Lancer GT and the Suzuki Vitara comes to mind.

Something that’s quite the opposite has been happening with the Korean makes here in Malaysia. Kia cars in Malaysia have classically been CBU models with only the Kia Spectra being a CKD model. Let’s not count the Naza-badged CKD models. Recently for the first time in a very long time, two new Kia models never seen before in the Malaysian market have been launched as a locally assembled CKD models.

Things are definitely changing somewhere in the tax department when it comes to cars. Excise exemptions? Free trade agreements? Industrial adjustment fund? These are the few possibilities that could be the catalysts for these changes with how import marques are sold here in Malaysia.

Back in July 2007, we also saw MITI take a step which many saw as a step backwards in the Malaysian automotive industry - allowing Open AP holders to import any car they want. Previously, Open AP holders could import any cars they wanted except for models that have been assigned to the franchise AP holders. Now you can see grey importers like Naza World bringing in the Honda Stream.

How has this affected Honda Malaysia’s own marketing plans in Malaysia in regards to the Honda Stream? I am sure they have planned to introduce it sooner or later. Honda Malaysia has invested so much here in Malaysia - an assembly plant in Malacca which even does some good for the economy by bringing in some money into the country by exporting CV joints.

To see it in a positive light, perhaps it is good that this grey import Stream has been given such a ridiculously high price tag - it could increase market perception of the Stream’s value and if Honda Malaysia gets around to introducing it with a lower price tag, it could have a positive effect.

Despite used car imports now being limited to 3% of the total market volume, grey importers can definitely damage the hard work that principals have been putting into their product plans. I cannot figure out these strange policies set by MITI which seemingly punish foreign investors who have poured money into our automotive industry. We are already losing out on so much to our neighbours.

Related Posts:
MITI now allows Open AP holders to import any car
2007 Honda Stream CBU imported by Naza World

Here is a letter sent in by Kumaresan Balakrishnan, a student from Johor Bahru currently studying in the UK. He shares with us a little about Proton cars in the UK.

I am a student originally from Johor Bahru, now at the Hull University Business School, doing Marketing and Logistics.

I have pictures of UK police Waja fleet. The Humberside Police in Yorkshire have a fleet 90% comprising of Wiras, and Wajas, and their plainclothes police drive GEN2’s.

Protons are extremely popular in Hull. I see many of them while walking to University from my house. Also, 50% of the taxis in Hull are Protons. Hull is the 7th largest city in England.

I have spoken to Proton owners here and they have nothing but praise for the vehicle, which I found unbelievable judging by the amount of problems my mum’s Waja has been giving her.

While taking a picture of the front of a police Waja, I was caught by the policeman who was using the vehicle. He had just returned from buying a sandwich at Subway.

After explaining to him why I was doing it he kindly allowed me to open the door and take a picture of the dashboard, but he was a bit shy and declined to let me take a picture of the car with him in it.

Everybody I ask seems to love their Protons here. Very, very, very strange for a person like me to hear such comments. I wonder if the quality control of export-bound Protons really are that much better.

More photos after the jump.

Click here to read the rest of Letter: Proton in the UK

I’ve been wondering about one thing for quite sometime now. Why isn’t Mercedes Benz putting the M266 into more of it’s cars? Where does the engine come from? Is it a Mercedes Benz development used solely in vehicles like the A-class and B-class or is it shared with other cars like Chryslers? As far as I know, Chrysler inline-4 engines use the GEMA engine (4B11) found in Mitsubishi, Hyundai and Chrysler cars.

The M266 comes in a few displacements, but one of the most notable ones is the M266 Turbo (M266.980), found in the Mercedes Benz B200 Turbo. Unlike Mercedes Benz’s other inline-4, the M271 Kompressor which uses a supercharger, the M266 Turbo uses a turbocharger. It is mounted transversely and is mated to either a 6-speed manual or an AUTOTRONIC CVT gearbox, sending power to the front wheels. It uses a BorgWarner K03 turbocharger. The M271 is a longitudinal rear wheel drive design.

Here is a comparison table between the M266 and the M271. The M271 specs used in this comparison is of the W204 C200K specifications. The M271 comes in different specs like different boost levels, which result in different performance statistics. Note that the W204 C200K’s M271 is not the most powerful M271 around, with factory tuning of course - the W203’s C230K has a slightly higher power output (192hp).

Based on the comparison table above, which engine looks like the better performer to you? I’m not sure why Mercedes Benz has two inline-4 engines. It should just pick one and stick to it, economies of scale are better that way.

Maybe the M266 could be adapted to rear wheel drive, or the M271 could be adapted to front wheel drive, though I think the former is easier, plus the M266 is a newer engine anyway and its performance looks better to me. However some might be turned off by the 8-valve SOHC valvetrain design, but then again what does that matter when the performance results are there? Power peaks earlier in the rev range, and torque has a wider spread and kicks in lower and stronger.

DaimlerChrysler is currently using three different inline-4 engines in it’s cars, the GEMA 4B11 engine, the M266 and M271. There is no place in the world’s automotive industry for inefficiency. Everyone is sharing components - a recent example would be BMW and Peugeot sharing a common engine with different configurations for the MINI Cooper and a few Peugeot models.

These are just my thoughts - if anyone knows these two engines in further technical depth and know why both need to exist, please do share in the comments for the benefit of all motorheads!

Having been tagged by the country’s number one cyber-patriot, the ever-entertaining but often-misunderstood Daft Oi to post up entry No.24 in Nizam Bashir’s 50 Posts to Independence project, I have decided to allow Shannon Teoh, a journalist from NST and part-time contributor to this site, to tell his rather interesting tale of two cars. Coincidentally, his first two cars were the same as mine. Full story after the jump!

Click here to read the rest of 50 Posts to Independence No.24

First of all, thanks to Mat Kamil Awang for the pointer to these documents. The source for the data I am going to use in this article is from a Japanese site hosting presentations from the 4th Asian Petroleum Technology Symposium. This particular presentation is entitled “Clean Fuels for A Clean Malaysian Environment”, by Harlina Firdaus Marzuki and Fazil Mat Isa of PETRONAS Research & Scientific Services.

This is heavy reading but insightful, so bewarned! Continued after the jump…

Click here to read the rest of Analyzing fuel quality in Malaysia - 3 out of 6 already Euro II compliant for petrol!

Happy Chinese New Year of the Boar to everyone. Hope you had a good time. Me? For personal reasons, there’s not much celebrations going on except for the exchanging of ang pows, plus my internet chose to be down the entire festive season. The last time my internet died was during Hari Raya. I see a pattern here.

Every Chinese New Year, I am unable to rest without fidgeting around and worrying about my cars. You see, I happen to live in a neighbourhood where most of my neighbours are young parents with little kids. They play lots of firecrackers. While I am not against this, there has been an occasion in the past where fire crackers hit my Nissan Sunny. No compensation was given, and when advised to go play their fire crackers in a playground just down the road, the advice was ignored. Now I am constantly reparking my Proton Perdana and a press car BMW 130i M Sport, especially the latter, further down the road and inside my house whenever I hear firecrackers.

Has any of you had this problem? Has fireworks and firecrackers damaged your car? Do you have the same fears that I do, or am I just weird? I think my paranoia is justified, as it HAS happened before. What do you do with these kind of neighbours?

With the recent floods in Johor, you can safely say that many people are picking up the pieces and putting their lives back on track. Buying a new car might be the last thing on the minds of Johoreans who probably need to refurbish their homes, buy new clothes, furniture and other necessities.

More after the jump…

Click here to read the rest of Johor Motor Sales

There has been some followup news on the e-plate system, basically a wireless RFID MyKad-like system for cars announced in mid-December 2006. The e-plate system is part of the government’s Automated Enforcement System to be implemented by 2010, which will also include 700 new surveillance cameras at strategic locations nationwide. It is assumed that these surveillance cameras will be equipped with e-plate readers, helping enforcement offices detect drivers who break traffic rules such as red lights and double lines.

Transport Minister Datuk Seri Chan Kong Choy reveals more details:

1. Tamper-proof e-plates will be sealed into the body of vehicles.
2. Will contain information on driver, chassis and engine number, and model.
3. E-plates are only available at authorised e-plate makers appointed by JPJ.
4. Enforcement officers will be equipped with hand-held scanners.

The supplier of the e-plate technology has not been decided yet though, the government is still deciding between 13 proposals from various parties. It is hoped that implementation can be done within this year.

Related Posts:
E-plates: RFID number plate for cars

French automotive engineering company Valeo says that it’s camless engine development project will likely be ready by 2010 or 2011, and it already has a few customers working together with them, though Valeo board member Martin Haub declined to name who the customers are.

Valeo’s camless engine is not a full camless engine, but rather half camless, where only the intake valves are electronically actuated with a camshaft. The exhaust valves are actuated using the traditional camshaft method. Valeo says it took the half camless approach because this gives the Valeo half camless engine 80 percent of the performance of a fully camless engine while keeping costs down by half as much - as it is, a four-cylinder half camless engine is about 300 euros more than a normal camshaft engine. As for benefits over a normal engine, Valeo says the engine has 15% to 20% better fuel economy, as well as 15 to 20% better torque at the low end of rev ranges.

Mercedes Benz already has it’s own camless engine project called KDI EVT, with the resulting cam-less valvetrain engine expected to be supercharged with direct injection. BMW is also researching the technology, but is concerned with cost and durability, says BMW general manager for calibration V8 engines Christian Bock. Bock says the technical barrier to camless engines are not the valve actuators themselves but rather the sensors to make it all work with precision. Currently sensors are no accurate enough and have engine-life durability and reliability issues.

Look after the jump for a diagram from Valeo explaining how their electronic valve actuators work.

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Click here to read the rest of Valeo has customers for half camless engine