All revved up for a robust year

Naza Group's joint group executive chairman SM Nasarudin SM Nasimuddin talks about the twists and turns of 2010 and how the automotive industry is due to fare in the new year.

THE year 2010 has been an amazing year for both the automotive industry and the overall economy, following the slowdown in 2009.

The automotive industry, in particular, is well on its way to breaking all previous records in achieving a full-year total industry volume (TIV) of 570,000 units, while Malaysia's gross domestic product (GDP) for the first nine months of the year clocked in at 8.1 per cent. Going forward, we expect 2011 to be another robust year for the economy, the automotive industry and Naza Group.

For Naza Group, we intend to tap the growing momentum in our domestic automotive market for both the Kia and Peugeot brands.

In 2010, our subsidiary, Nasim Sdn Bhd, the official distributor of the Peugeot brand in Malaysia, made history when it was selected by Automobiles Peugeot to set up a production hub for the French carmaker in Malaysia for the region.

This was not only a momentous occasion for us but also for the entire automotive industry in Malaysia. Under this new partnership, Nasim will produce specific Peugeot models, catered for the Asean region, at our RM500 million plant in Gurun, Kedah.

The first car to roll of the lines under this partnership is the new 207 sedan, which was launched to the domestic market in November and has already been exported to Thailand. By the first quarter of 2011, we plan to ramp up exports of the Malaysian-made 207 to other markets in the region such as Brunei, Indonesia and even Sri Lanka.

The next Peugeot to be produced in Malaysia and exported to the region is a new C-segment sedan named the T73. For this sedan, we plan to produce 60,000 units over a span of five years with an estimated 60 per cent to be exported to other countries in the region and even as far as South Africa. Additionally, Nasim will look at expanding its business beyond our shores in the coming year by taking over Peugeot distributorships in other emerging markets.

Peugeot's bullish outlook for the region is understandable. The downturn in the global automotive industry two years ago demonstrated the necessity for global brands to begin tapping emerging markets such as China, India and Southeast Asia.

A recent report even indicated that Peugeot's sales in China by 2015 would surpass its sales in France. With Malaysia as the largest passenger car market in the region, it is understandable why Peugeot and its European rivals have focused on making Malaysia a regional hub.

At the same time, we have seen our domestic sales for Peugeot steadily increasing year-on-year, and next year, we intend to more than double our annual sales volume for the brand to 8,000 units. Much of this increase is attributed to the fact that we have made Peugeot the most attainable European brand in the market and have a wide range of products to offer. For 2011 and beyond, Nasim will work towards beefing up its model line-up to offer Malaysian consumers more choices.

But we can't doubt the fact that Peugeot's success is partly attributed to a growing shift in the market towards continental and Korean makes.

This has certainly been the case for our other subsidiary, Naza Kia Malaysia, the official distributor of Kia Motors vehicles in Malaysia. Demand for Kia vehicles today is not what it was a few years ago.

Today, Korean cars are no longer just viewed as good value propositions, and the mere fact that Kia has had one of its best years globally is testament to that. In the first 11 months of this year, Kia's global sales have increased 17.3 per cent to 179,200 units.

There is no doubt that the company's new design philosophy, led by chief designer Peter Schreyer, has made Kia a desirable brand abroad and we have seen that desirability resonate back here in Malaysia.

The first Kia under the company's new design direction that was launched in Malaysia was the Forte, and to date, we have sold over 5,000 units of the model and picked up numerous awards for it, including the People's Choice Award at the NST/Maybank Car of the Year 2010.

The success of the Forte has led to strong demand for Kia vehicles in Malaysia. The new 2011 Kia Sorento, launched early this month, has already recorded over 300 bookings. In fact, in 2011, we are looking at increasing our sales volume by 64 per cent to 18,000 units. This increase will be attributed to the introduction of five new models for the brand in the coming year. Many of these models have already picked up several awards abroad, and demand for them in the local market has been steadily increasing.

The design revolution at Kia is not just subjected to its cars. The Korean carmaker has globally introduced new flagship showrooms, called Red Cubes, which are part of the company's ongoing rebranding exercise and strongly place an emphasis on design. We will kick things off by launching a Red Cube showroom in the Klang Valley, before adding more of these showrooms in other parts of the country next year.

A big priority for every player in the automotive industry is moving up on the sales satisfaction index (SSI) and customer satisfaction index (CSI) ladders. This year, Naza Kia Malaysia's rankings in both indices were higher than the industry average and a big aim for us in 2011 is to achieve better SSI and CSI rankings.

On the whole, we believe the automotive industry is heading for another record-breaking year in 2011. This year itself, the industry is well on its way towards a record year. The latest figures from the Malaysian Automotive Association (MAA) for the 11-month period ended November 30 show a total of 550,391 units of vehicles were sold, which is already higher than 2009's full-year TIV of 536,905 units and well within reach of its official 2010 target of 570,000 units.

For 2011, MAA expects the pace of growth to be slower at 2 to 3 per cent. However, growth in the automotive industry often correlates with that of GDP. If the economy expands between 5 and 6 per cent next year, we may see a bigger jump in car sales for 2011.