Dr M, here’s why we don’t need another national car

Rosli Khan, Free Malaysia Today

Dear Tun,

Although this is a project that is very close to your heart, we have to consider and accept the realities of the change in economic factors, financial situations and market environment.

Sorry to say, Tun, your idea about a car manufacturing formula may have worked in the 1980s, but due to the changes over the last two decades, it may not work in 2018.

The market in car demand has significantly shifted to another level. Car manufacturing technology has changed tremendously, and as a nation, Malaysians have never developed our own local talents in this industry. We are not leaders. Our design skills and technological developments in the manufacturing of car components alone leave very much to be desired – let us not talk of becoming a leader in the automotive field.

Sorry to say, our baseline technological know-how in this field has remained superficial. We all recognise the fact that this industry was mooted by you, Tun. Many of those in the industry today literally owe you their livelihoods.

But to be honest, we never took off or grew to a level that was comparable with other new car manufacturing nations such as South Korea, which developed their car industries much later than we did. The end products are there to be judged.

It’s all about numbers

It was not your fault, Tun. We never blamed you. You started Proton well, on good footing, and it was a novel idea which needed to be developed, supported and grown.

But the subsequent prime ministers who governed the country after you left in 2003 never paid much attention to the industry and did not share the same strategic visions that you had.

They failed to develop your original idea in Proton, which suffered and was left to bleed, privatised and eventually sold off to Geely.

Still, a key point to note is that the car industry and manufacturing is all about numbers and volume. For it to attain the economies of scale and achieve a very low cost per unit, it has to produce and sell a sizeable volume. This is where Proton failed and could not compete.

As such, the company was never able to be developed to a level where it could become more competitive and open to more competition, embrace new technological changes, adopt those new technologies, develop new products and sell the products beyond domestic shores in order to build up the numbers.

As we know today, Proton never reached the numbers that it badly needed.

That being the case, I have listed six key points that are against the revival of the car manufacturing industry in Malaysia at this late stage of our economic cycle.

Point #1

Car manufacturing is now highly robotic. We do not possess that technology. If we were to buy everything from scratch, there would be no point in undertaking such a venture as everything would be super expensive. We would not benefit from the economies of scale, the unit cost of which would be solely determined by this manufacturing scale and possession of such technology.

Point #2

Unlike Germany, Japan or South Korea, we do not have a homegrown industry in robotics technology. We would be a late starter in this field. Better late than never does not apply in this case. Car manufacturing has become so mechanised that the entire industry skills set has been geared towards supporting that type of production. We have continued to be a technology user instead of a technology developer. In the case of car manufacturing, I am afraid we have left it too late and have missed the boat.

Point #3

If there is any lesson to be learnt from Proton, it is that our marketing and sales have been very poor. We never learned how to market Proton cars even among Asean neighbours, let alone to other countries like Japan, China or South Korea.

Marketing is often thought of as a simple process. But if we do not get it right from the start, it becomes an uphill task. To begin competing now when there are so many choices and well-known brands available will be neither simple nor straightforward, and could be an expensive exercise. By the way, do we not know about the growth and booming car sales in China?

Point #4

An Asean car? Most industry players would say “no way”. We cannot work regionally as the Asean grouping has proven many times over. The association does not work well or effectively over many issues, and its member nations are at odds in many matters especially defence policies and other trade matters.

The only Asean-level project that took off – but eventually failed – was the fertiliser plant in Bintulu. This has been proven to be an approach that we should not take.

Point #5

National car or not no longer matters. We should learn from European car manufacturers in this regard. They had a rich history in car manufacturing before the Japanese came in. The British and Swedes, especially, swallowed their prides when they lost national car brands like Land Rover, Volvo and Saab, to name just a few.

Volvo was sold to Geely to become a more viable brand name and dominate the China market. Aston Martin is still the pride of Britain, privately owned but maybe not for much longer. The same goes with Maserati in Italy.

Jaguar and Land Rover are now owned by India’s Tata group, Rolls Royce and Mini by BMW, and Bentley by Volkswagen. There is no more national pride in owning a car brand.

So maybe it’s time that we also let go of our desire for a national car concept; we learned a very expensive lesson with Proton and our ambitions for Lotus.

Point #6

This is perhaps the most important point for us as a country to consider: where is the car industry headed?

Many reports say car manufacturing is now considered a sunset industry. Research is being done to find ways to replace it, not revive it.

Driverless technology is one option, but that could be temporary. Electric cars are another, but that will not last either.

A lot of research is being done on battery technology (graphene, etc) as fossil fuel is no longer considered sustainable. It pollutes and poses environmental hazards.

So with powerful and long lasting batteries, the shape and size of cars may take on a different form altogether. Vehicles could be up in the air instead of running on roads. Are we prepared for this sort of technology?

We should be part of the new research to replace cars, and try to develop a new mode of transportation for the future. I believe this should be our strategy now.

By the way, in conclusion, please do not forget that we still have Perodua, our second national car project which has been rather successful in the small car market.

If there is any need to move ahead with this initiative, I believe we should all rally around Perodua to further develop and support this unit.

As the saying goes, there is no need to reinvent the wheel – we only need to improve it.