Time to open up the market for 3rd national car

I just heard that the prime minister is going to announce his choice for the national car soon. In fact, rumours have been circulating for some time that he has more or less decided that we should go with a specific brand from Japan. It’s an open secret, according to some reliable sources.

I think there would be nothing wrong with that decision, except that some Malaysians might perceive it as a sign of surrendering our small but lucrative car market to a single Japanese producer, yet again, after the Proton experience.

Of course, this may not be exactly true. And yet, there is also the view that having a single Japanese producer may not guarantee that Malaysians end up buying the best car in the market or the latest in automotive technology.

Speculation is rife in the industry that the Japanese are pushing us to accept a 10-year-old ICE (internal combustion engine) platform. Is this true?

The other setback, of course, is that the so-called Malaysian producer would become overdependent on this specific and particular partner from Japan. This is precisely the business model that failed and bound Proton over for many years with a Japanese brand when it first started.

Eventually, when the business partnership went sour, that brand left Proton high and dry with no technology transfer to speak of and no platform to call its own. Proton could not produce any cars on its own and had to look for another partner in order to continue the car production business.

But I think most people are aware of how and why Proton went down. This includes those in the government. It was an expensive lesson which need not be repeated.

Car platform

Starting a car manufacturing business is not cheap unless you have an approved platform to begin with. But to develop a platform and get it tested and approved is not only expensive but also time consuming.

An easy way out would be to work or collaborate with an existing manufacturer and make use of a previously tested and approved platform. While some manufacturers are willing to share their latest platforms, obviously at a cost, others are very stingy in their approach.

So a new player, like our third national car partnership, would have no choice but to negotiate and rely on an old platform, possibly given at a reduced cost and hopefully by a known manufacturer with ready upper body design.

For this specific reason of capital outlay, the government has gone on record to say that it is not going to fund or sink in any money to kickstart the third national car. It will be left entirely to the private sector to secure the platform and finance the entire process, which is what critics of the national car want to hear.

Strangely enough though, the government still feels obliged to choose and endorse the formation of this partnership and who should partner which brand. Is this really necessary?

Level playing field

This brings us to the next question of why the government does not want to have more than one producer, to encourage other producers to come and invest in Malaysia, let them set up their own production facilities, place no limits on what types of vehicles they wish to produce, and sell them locally as well as for export.

In other words, set up a level playing field policy for the automotive sector for other brand producers to team up, produce and compete. This is exactly what our neighbouring country has done for decades and it has proven to be successful without having the pride of owning a national car.

Would not this policy be great for the economy of our country too?

The survival of local vendors, the most common excuse used by the government for practising domestic market protectionism, is often used in the adoption of a national car scenario. But with so many producers coming in, the local components manufacturing sector would only get bigger.

Under such a growth scenario, market protection would no longer be required. So why limit our capabilities to serve only a particular Japanese manufacturer?

Why don’t we invite the Germans to come in and share with us their latest technology and their automotive know-how? Or even the French or Italians, for that matter, if they are also interested? For a start, Italians are very advanced in car design and are known to be number one in the world. Maybe Malaysians could learn a thing or two from the Italians, for a change. Shouldn’t we work with the best in the world?

We already have Geely from China running our Proton, so what is wrong if the South Koreans also think that they have the capacity to produce cars in Malaysia and export their products as well as sell them locally? The world market trend is now moving towards hybrids as a step towards manufacturing a full electric vehicle (EV).

Geneva Motor Show

As a consuming nation with an appetite for involvement in automotive manufacturing, I think we should operate as closely as possible to the changing market environment. Some car manufacturers are ahead of others in developing new technology. Some are fairly conservative and play it safe.

If we are to include petroleum companies in our market assessment and prediction of which direction the auto industry is heading, it becomes obvious that the EV is the way forward. Otherwise, how do you explain the fact that a European oil giant is investing heavily in EV charging stations and converting half of its petrol stations capacity into EV charging stations instead? This is happening not only in Europe but also in the US.

Many European countries are inventing and introducing new car charging mechanisms that will shorten the time taken to charge an EV. Now, it is possible to charge EV batteries up to 80% capacity within 15 minutes.

This new charging mechanism will eliminate the negativity of having an EV: the waiting factor, which has put off many potential buyers and users alike.

Research advancements in battery technology that will also reduce the size and weight of the batteries, are some of the other indicators that favour EVs over ICE or hybrid cars.

News has already broken that at the next Geneva Motor Show, due in March 2020, in which all the spots in the pavilion have been sold, 40 new EVs will be shown for the first time ever.

This is going to be the biggest EV exhibition which is expected to dominate the car market in years to come.

And the good news is that, word has it that a spot has been booked by a Malaysian outfit to showcase its new EV! I hope this is true. It would definitely make Malaysians very proud to be there.

The views expressed are those of the author and do not necessarily reflect those of FMT.