Thank You Malaysian

Previously, in the entry titled "Not A Jaguh Kampung We Are",  this blog shared about how Perodua, being a Malaysian brand was ranked number 4 in the region, in-terms of total sales of new car. Today, it is intriguing to share another fact that will make all of us Malaysians proud, that is how the Perodua Axia, designed and produced locally by Perodua was ranked at 8th placing among Top Ten Best-selling Models in Asean in 2017.

It is truly inspiring for Perodua, being just a small and young local car company to have its product, Axia to be ranked alongside all the big names within the automotive industry. Despite only being sold domestically, Axia was still able to stand tall at number 8 against other brands who are selling in most ASEAN countries.

In 2017, 88,417 units Axia was sold. A slight drop compared to 89,059 units sold in 2016, when Axia was ranked at 7th placing. Axia is the first "transformation model" by Perodua produced at its EEV certified plant, Perodua Global Manufacturing Sdn Bhd. 


Equally inspiring is that the other Perodua model, its  all new Myvi is now being displayed at Daihatsu Motor Co (DMC)., Ltd's head office in Osaka, Japan. Maybe to some, they will ask a "so what?" question. Yes, maybe It is not a big deal but the fact that the new Myvi is totally a local product, designed, engineered and produced by Malaysians for Malaysians, it is a proud recognition for Perodua, for DMC to showcase the product at their gallery in Japan.

This is a good exposure of Malaysian's product not just to DMC's Japanese business partners and associates but to all its other visitors from all over the world. This is like putting a Perodua product at par with DMC's models. This is like putting a Malaysian product at the same level as the Japanese products.

For me, I am thankful of these achievements. I am sure these will further inspire Peroduans to work harder to be the best and to give the best. To Malaysians, these are "Malaysians Boleh". 

Creating Affordability - Car Pricing Strategy

For many OEMs, positioning their products at the lowest price may be an added advantage. But the challenges in bringing down the price are much too many. But of course, to customers, , they wished for the cheapest BUT with no less superior in-terms of quality, features and specifications.

On the Road (OTR) price of the car is determined by various factors. Development costs, material costs, royalty (if any), taxes, marketing and distribution costs as well as the profit margin. Reduction in one factor alone is not sufficient to reduce the OTR price if other factors are increasing at the same time.

When talk about the impact of GST, yes, simply calculated, there is a reduction by 4 percent in tax as compared to the previous Sales Tax of 10 percent versus GST of only 6 percent. Unfortunately, things were not as simple as that and a direct reduction was not the case due to different basis in deriving both taxes.

Rather unfortunate too that when GST was first introduced, OEMs were also slapped with weaker Ringgit Malaysia (RM) against US Dollar (USD). Import became very costly. Thus, not many OEMs were able to translate the savings on GST onto a lower OTR price despite the request made by the government for price revision. Many OEMs were unable to reduce the price under tremendous pressure of higher USD as many are depending on imports.

OTR price down should not be looked solely from a lower OTR price. In Malaysians market, we have seen brands maintaining their price despite higher USD. We have also seen many brands maintained their price positioning but offering much higher specifications and better features. This is what terms as “Creating Affordability”. It is not price reduction, but instead, a value up for the same price.

But of course, again, it is very subjective and arguable depending on how we view the subject matter. The options are, lower OTR price with lower specifications and less features or keeping the same price with higher specifications and better features.

Perodua, being a national car, has tried its very best to adhere to the request made by the government. Thanks to previous efforts on cost reduction, including by its vendors, Perodua was able to directly reduce marginally the OTR price of selected models such as an Alza and the previous Myvi but not on its other models. Even though Perodua’s localisation level is much higher than other OEMS in the market, there are still some exposures on forex pressure.

Instead, Perodua put its focus on creating affordability by introducing one after another, a higher specifications and better features model as well as to continue to improve its quality. In 2018, Perodua’s customers are still paying almost the same price as before but for much higher value products, amid the increase in material costs due to unfavourable forex conditions and a hike in inflation over the last many years.

Perodua’s transformation initiatives has resulted to the introduction of higher safety features, better comfort, better fuel efficiency and newer engine at either no increase or just a small hike in price. This is what creating affordability is all about. No OTR reduction but providing the opportunity for Malaysians to own a much better product not possible before, at an affordable price.

The current Perodua Axia launched in 2014 is the indirect replacement of the previous Perodua Viva (2007). The latter was the replacement for the first Perodua model, the Kancil (1994). Axia has came a long way with its newer EEV compliance 1.0 L engine and 4 stars ASEAN NCAP rating compared to the 660 c.c. Kancil. Despite a span of over 21 years and changes in operational costs and inflationary rates, the Axia is still selling at almost the same OTR price as the Kancil in 1994 at just slightly over RM24,000.

Similarly, the 1^st generation Myvi 1.3 L Premium with 2 airbags was priced at RM50,800 in 2005. The price was reduced to RM49,900 in 2011 when the 2^nd generation was launched in 2011. When GST was introduced, the selling price was further reduced to RM47,200 despite of the introduction of some new features and rated 4 star ASEAN NCAP. The 3^rd Generation Myvi which was recently launched with 4 airbags and loaded with other safety features and comfort, newer EEV compliance engine, better fuel consumption and 5 star ASEAN NCAP rating, the OTR price is still the same as the one once sold in 2011. Mind you of the severe fluctuation of the USD and Yen, mind you of the shift in the inflation rate over those period.

That is how the call for lower car prices should be defined and understood as Malaysians buyers should not be treated as 3^rd World buyers, by offering an inferior product just for the sake of reducing the selling price.

For me, pricing is a business decision and part of the company’s marketing strategies, thus should not be dictated one way or another by the authority. However, pricing must also be a result of the business environments influenced by government’s decisions and policies.

Myvi oh Myvi

The lucky 18,000^th customer of the New Myvi received his car yesterday, during a special occasion in conjunction with Perodua Annual CNY Luncheon with Media and Business Partners. It was a “delayed” delivery session actually, as we already delivered to the 20,000^th customers a day before yesterday. Why the 18,000^th? Because it is 2018. So we thought it is a good gesture to have an event for the 18,000^th customer.

Since 2005, we have produced and delivered more than a million units of Myvi. We are now selling the 3^rd Generation Myvi and proudly to say, a purely Malaysian product for Malaysian. Myvi or My Vehicle or My Vision was first mooted in 2002 with three companies, namely Daihatsu, Toyota and Perodua were jointly involved in what was called “simultaneous engineering” project in Japan. For Daihatsu brand in Japan, it was known as Boon and for Toyota, it was Passo. When Myvi was launched in Malaysia, it was slightly different in design and features compared to Boon and Passo as Perodua wanted to include some of the Malaysian unique requirements into its product. That was the beginning of what is now known as “Malaysian Unique” introduced in most of Perodua products since after.

And it was the beginning of many histories too. Myvi led Perodua to take over the pole position in the market place. Myvi stayed as the best seller model in Malaysia for eleven years in a row. Myvi is now re-badged and exported to Indonesia as Daihatsu Sirion.

In 2015, during its 10^th year anniversary, Myvi was dubbed as new Malaysian Icon. It was the name that all Malaysian remember and it still is.

Not exaggerating too, Myvi is the pride of the nation.

Unluckily though, as a result of overwhelming demand for the New Myvi 1.5 AV, many of our customers have to wait more than 3 months before they can receive their cars. At planning stage, based on sales trend of the 2^nd Generation Myvi, it was projected a ratio of 50:50 between the 1.3L and 1.5L variants. The actual booking received was totally different with 1.5L orders went as high as 90 percent. Now it is reducing to around 80 percent.

The imbalance between booking and production created a long waiting period for 1.5L customers. Perodua reacted to this almost immediately by increasing the capacity and adjusting the ratio of 1.5L to 75 percent. Target is to further increase to 90 percent by early March. This need to be done carefully as Perodua want to maintain its quality level and will not sacrifice anything in the expense of quantity. Perodua is now working around the clock to expedite deliveries and Perodua’s vendors too have been doing their parts to increase the supply of components. They need to recruit more workers. They need to invest on new mold to cope with the demand and above all, they need to ensure consistency in quality.

Two days ago, Perodua issued an apology statement to all its customers seeking for understanding and patience, while Perodua is doing their best to speed up the delivery. Yes, it is only a gesture BUT Perodua is not hiding from its shortcoming. 20,000 units delivered over a span of slightly over two months’ period is already a record and Perodua is doing its best to even break that record further.

For me, breaking record is not a point. Fulfilling the orders is the point. I feel them, thus the recent “apology” statement. From the bottom of my heart…I humbly apologize.

January 2018

Malaysian cars sale is forecasted to close lower by 740 points with TIV of 43,900 in January 2018 compared to the same period last year. Generally, the sentiments are still weak with most brands recorded lower than the same period 2017. Proton is likely to start the year with only 4,800 registrations or around 38 percent lower than January 2017. Toyota will also see a decline by more than 2,000 units compared to the same period last year.

Despite some brands has started early on the offering of Chinese New Year discounts, the overall market is still weak.

*The official figures for January 2018 is still pending on announcement by MAA.

On the other hand, Perodua seems to kick the year off with good footing by registering 17,700 units or 3,500 units more compared to the same period last year. Despite lower figure than what was recorded in December 2017, Perodua is expected to secure around 40.3 percent share in January 2018. This will be a new record high for Perodua in-terms of market share for the month of January.

Assuming the above are correct, the market share for National Brands will likely to return to above 50 percent in January 2018.

In conjunction with Chinese New Year’s celebration, Perodua has recently announced its “Ang Pow Deal” Campaign, offering discount up to RM2018 for selected models and variants. Hopefully, the deal will entice more buyers to come forward and grab the offer.

For me, I am thankful of the support given to Perodua. And I am proud of every Peroduan.