In the automotive industry, keeping manufacturing costs as low as possible is paramount, as the higher the cost, the less competitive one becomes. How a market thrives – or doesn’t – is largely determined by its ability to secure or produce elements in the supply chain, be it in the form of components or materials needed for production, in cost-effective terms.
In this regard, Malaysia is lagging behind, and that’s an important factor curbing its growth. That’s the opinion expressed by Geely chairman Li Shufu, who said the competitiveness of Malaysia’s automotive industry is being restricted by its automotive supply chain costs, which is about 30% higher than China’s and more than 10% higher than Thailand’s.
In an interview on state-owned CCTV programme “Dialogue,” which was picked up by Chinese tech website CNMO, Li said that the fundamental reason for the high cost of Malaysia’s automotive supply chain lies in the lack of competitiveness of local parts.
He said that Malaysia’s automotive parts supply still relies heavily on overseas imports, and that the relatively small size of the local automotive market meant it was difficult to get enough scale to keep costs down.
Having realised the seriousness of the matter, Li said that that one of Geely’s current priorities is to help improve the competitiveness of the country’s automotive industry’s supply chain. He stressed that Geely will promote the localisation of Malaysia’s auto parts industry by introducing advanced global auto parts companies into the market and strengthening cooperation with local suppliers.
Undoubtedly, a large part of the investment exercise will centre around the development of the Automotive Hi-Tech Valley (AHTV) project. The Chinese automaker said last year it had big plans to increase its investments in Malaysia to the tune of RM32 billion, while making the country its production hub for export markets.
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If you can’t deal with it then get rid of your relationship with pLoton and go back to your home country stupid fool
Wow… So proud for a jaguh kampung.
For them to pack their bags and go home is easy. P1 is just a rounding number in their P&L.
We are the ones that need their tech and investment.
The correct accusation is, after so long of supporting local parts industry, they are still just small fry that couldnt go international. Time to rethink.
Loser mindset
Don’t bluff! You can only achieve 30% savings by cutting corners like not welding rear axles properly or producing substandard batteries that blow up for no reason
Li Shufu, the main problem in Msia is volume, not enough scale of economic.
You can help by sourcing some parts from Msia for your global manufacturing line, just to have enough volume to justify investment and low price.
Win win situation. Even X50 cannot facelifted due to this and will surely make Proton less appeal.
More like confirming what’s been suspected: 30% cheat profits for cronies vendors.
He is absolutely right. Small market that is exacerbated by years of protectionist policy.
You think cina company can and willing to help local? Dont be innocent, they need you when u make money for them. If no money back, they juat cao
MCM geely very successful…huh
Every boss towkay does business wants maximum profits to finance lavish lifestyle luxury cars villa and plenty mistress
Mark-up as high as possible wokay
good, can be 30% more expensive than china car price?
Why would anyone believe anything that comes out of a commie’s mouth?
Tell me something that I don’t know…..
Malaysia used to have abundant of iron ore. Now, we’re importing iron from overseas, especially China. There should be a way to increase local productivity, such as impose higher tariff on parts coming from China, so that local suppliers can be competitive. But, at the same time, tax on cars should be reduce so that people will still buy cars at the same price. Still a win-win for the govt. My 2 cents.
Guess broken door handle and broken axle are the way to go.
Malaysia is not connected to BRI like thailand or Vietnam. Susah to compete as supply chain needs transport and our shipping cost is too much and too slow. Makes sense.
That is why local assembly of higher end models like BMW, Merc, Volvo with large profit margins is worthwhile to be assembled here. Budget sensitive models like the sub-100k category with thin margins will unlikely to survive unless there is a large volume to compensate. In the sub-50k market last time got more choices but even Proton seem to be giving up the mantle to Perodua. Korean makes already surrender to Japanese makes in the 50k-100k category.
yaya cut cost.. until gantung no welding.. LOL
Reading between the lines, China are coming for Malaysia Businesses.
What do you expect after years of tongkat culture enriching the cronies?
Yeah but Malaysia currency the Ringgit is 50% stronger than the Yuan. So what are we going to do, depreciate the currency strength? I don’t think that’s a desirable outcome.
Our local market too small to sustain enough volume to achieve competitive economic of scale. Thailand is 10% cheaper… Becoz they hv many automotive manufacturing investments that export lots of parts and cars overseas.
Proton and perodua alone not enough to build sustainable automotive parts industry. Need for vendors to stretch further overseas
Similarly in local automation machine making industry. We noticed there is 30% material cost faced by local fab house against china parts. An issue which miti should study and look into how help lower metal cost for local manufacturing companies.. especially those export oriented products
For those who always complain that we lost another investment to Thailand or what not. Here’s your numbers. Already said many times we’re too expensive but noooo everyone wants to have high income without high productivity, and loves to blame others for leakage and corruption and what not.
Not saying those are not valid problems, but there’s really a need to improve standard to global levels if we are to compete.
Yes, it is a fact that Malaysian manufacturing cost is higher than in China.
Why? Malaysia market is too small for the Child Parts and Raw Materials manufacturer to setup plant. Therefore we still need to import.
We are importing and utilize in lower MOQ compared to China manufacturer. This is the main points that i seen.
Don’t take his statement at face value…just read between the lines
Has he heard of economy of scale? How big is China or Thailand supply volume compared to Malaysia?
1) If Geely-Proton is honest in trying to help local supply chain, why hasn’t the local content increased?
2) Which local supplier (other than Proton’s sister companies in DRB group) has Geely successfully retained or grown?
3) Geely knew very well that market volume for our supply chain is small before they decided to take over Proton. In the beginning before you even help them you already dismissed local suppliers just because they cost slightly more than China suppliers, how do you expect them to survive and improve competitiveness?
4) 1st step is to keep them alive, not strangle them to death by taking volumes away. Next, 2nd step is help them gradually lower their costs for you by increasing their production volumes. And dear Proton, please realize you cannot sell high volumes if Proton car keeps coming without Android Auto and Apple Carplay!