Professional Documents
Culture Documents
Eco 6 Recovered)
Eco 6 Recovered)
Project..............................................................................................................................................1
Best Selling Car Brand in Malaysia.................................................................................................2
The Top 10 Best Car Brand in Malaysia in 2010............................................................................2
Market structure is Oligopoly..........................................................................................................4
Malaysian Vehicles Sales January to June 2010.............................................................................5
Car Sales Drop in 2009....................................................................................................................7
Best selling model in the world.......................................................................................................7
Malaysia car sales to recover in 2010..............................................................................................8
MAA Vehicle Sales, Market Share, and Ranking Summary for Passenger cars & Commercial
Vehicles in Malaysia for Jan to June 2008....................................................................................10
PRODUCTION & SALES FOR FEBRUARY 2011....................................................................12
1. PRODUCTION......................................................................................................................12
2. SALES...................................................................................................................................12
3. Market Performance in February 2011..................................................................................12
The objectives of the NAP.............................................................................................................14
NEW POLICIES AND MEASURES IN THE NAP REVIEW....................................................16
A. MANUFACTURING LICENCE: PROMOTING HIGH IMPACT SEGMENTS...............16
B. TAX/DUTY: PROMOTION OF EXPORTS OF VALUE ADDED PRODUCTS..............17
C. TECHNOLOGY: PROMOTING HIGH VALUE AND GREEN TECHNOLOGY............18
D. SOFT LOANS/GRANTS: MEASURES TO ENHANCE COMPETITIVENESS OF
PARTS/COMPONENTS MANUFACTURERS.......................................................................19
E. STANDARDS: EFFORTS FOR INCREASED SAFETY....................................................19
F. THE APPROVED PERMIT SYSTEM.................................................................................20
G. THE NATIONAL DIMENSION: A STRATEGIC PARTNERSHIP FOR PROTON........20
H. EFFECTIVE DATE..............................................................................................................21
Bibliography..................................................................................................................................21
Best Selling Car Brand in Malaysia
Compact car maker Perodua was the best-selling car brand in 2009, retaining its leadership for a
fourth straight year. Its market share rose to 31.1 percent from 30.5 percent in 2008.
National carmaker Proton gained ground with a 27.6 percent share, up from 25.9 percent in
2007. Japanese carmaker Toyota Motor Corp. secured 15.2 percent of the market, followed by
Honda Motor Co. with 7.2 percent and Nissan Motor Co., with 5.9 percent.
Malaysia maintained its status as the largest passenger car market in Southeast Asia with sales of
486,342 units, or nearly 91 percent of its total auto sales in 2009.
Perodua (Perusahaan Otomobil Kedua Sdn Bhd) is top car company in Malaysia.
This is the 5th time Perodua took the position consecutively with popular Myvi being the best
selling model in Malaysia. The Perodua Myvi has been on top.
Perodua holds a market share of 31.2% and with their all-time record sales of 188,600 units in
2010, this means it is the best selling car brand in the country.
The 13% increase in sales were mainly due to the strong demand from the customers for more
affordable cars in the compact car segment. Though Perodua sold 166,700 units in 2009 but that
was enough for it to be the top brand as well.
Perodua Alza is the best selling MPV (Multi-Purpose Vehicle) with 42,000 units.
Viva, the smallest compact car from Perodua chalked up 69,000 units in sales.
TOTAL
TOTAL UNIT Market share
UNIT
CAR BRAND SOLD IN
SOLD IN %
2009
2010
1
HYUNDAI-INOKOM 5392 5,573 0.9
0
The market structure can be identified by considering the number and size distribution of firms
(market share in terms of subscribers and revenue); the extent to which products are
differentiated; how easy it is for other firms to enter the market; and the extent to which firms are
integrated or diversified (Ferguson,1994).
The typical measurements of market structure are 4-firm concentration ratio (CRn), Herfindahl-
Hirschman Index (HHI), etc. However, as there are only few firm in this market, individual
market shares are used to measure market power.
Base of the above information, it was deduced, the market structure is Oligopoly, in this market
few firm compete together. Main competitor are in the table was illustrated
Proton,Perodua,Toyota,Honda,Nissan…they compete together, in a Oligopoly in this situation
there is a entry barrier because of government intervention for supporting the local brand, it
means market structure is oligopoly with a duopolies power between proton and produa.
Subscriber
Perodua: 31.2%
Proton: 26%
Market share
Toyota: 15.2%
Source:
“Malaysian
Automotive
Association-
MAA There is no single dominant firm. However,
Perodua is the leading firm in both revenue &
subscriber market share, followed by Proton and
Toyota.
Uncompetitive situation compare to ASEAN product huge capital investments are asset
Exit barriers
specific to this industry
Besides, Malaysia recorded the highest half-year sale of 301,077 new vehicles in the period of
January to June 2010, a 19.8% increase from the same period of 2009.
Of the total units sold, 90.3% or 271,873 units were passenger vehicles, it means car from a
luxury product going to be a necessity product which has recorded the passenger car as the most
vehicles sold.
PROTON
4 3,652 42,984
PERSONA
TOYOTA
5 2,878 29,387
VIOS
Best Model of
6 HONDA CITY 1,474 19,722
2009 Thailand
PROTON
7 2,294 18,451
EXORA
TOYOTA
8 1,412 14,572
HILUX
NISSAN
Best Model of
9 GRAND 1,018 12,287
2008 Indonesia
LIVINA
TOYOTA Best Model of
10 595 11,468
AVANZA 2007 Indonesia
For 2009, Best Model of the Year was Proton Saga and Best Value-for-Money Model of the
Year was Perodua Viva, though the best selling model was lead by Perodua Myvi from the year
of 2006.
In units sold in 2009, Proton Saga was in second place followed by Perodua Viva and Proton
Persona. Meanwhile, Toyota Vios in fifth place lead the list for imported cars followed by Honda
City, Toyota Hilux and Nissan Grand Livina. Honda City was best model of the year in
Thailand.
Malaysia's 2 percent drop in auto sales in 2009 was small compared to a 28 percent decline in
Singapore, 20 percent in Indonesia and 16 percent in Brunei.
Thailand registered an 11 percent decline but remained the largest auto market in Southeast Asia
with total sales of 548,871 units, mostly commercial vehicles. Only Vietnam and Philippines
posted higher auto sales.
Best selling model in the world
The leading car brand in the world is BMW followed by Toyota, Honda, Mercedes and Porsche.
Toyota Corolla in the other hand is the best selling model in the world. This is followed by Ford
Focus, Ford Fiesta, Volkswagen Golf and Honda Civic.
Local cars are better for those who earn less than RM5k monthly, be it a Perodua or a Proton,
check your local car dealer for the best bargain. Some car dealers has better offers than the others
although the loan calculator is the same for new car. Car dealers sometimes offer discounts.
Auto sales in Malaysia fell by a smaller-than-expected 2 percent in 2009 but will rebound and
could hit a record high in 2010 amid the global economic recovery.
Malaysia is Southeast Asia's largest passenger car market. The car sales fell to 536,905 vehicles
in 2009.
It exceeded the association's forecast of 500,000 vehicles as sales perked in the last quarter of the
year, buoyed by government stimulus measures which boosted consumer spending, improved
business confidence. There were also aggressive sales campaigns.
The stronger performance in the fourth quarter, underpinned by Malaysia's economic recovery, is
expected to extend into 2010, with auto sales seen rising 2.4 percent to 550,000 vehicles, beating
the record high of 552,614 units sold in 2005.
Malaysia's economy is forecast to rebound to grow 2 percent to 3 percent in 2010 after a slump
in 2009. However, the government has cut spending for 2010 to rein in a swollen budget deficit
and plans to revamp expensive fuel subsidies in the next few months.
Sales is expected to rise to 566,500 vehicles in 2011, and to surge to 618,000 by 2014. 2009 Top
most selling car in Malaysia is PERODUA MYVI
Sales volume in February 2011 was 14,394 units or 26% lower than the previous month.
However, YTD February 2011 cumulative sales expanded by 3,892 units or 4.3% against the
same period in 2010.
MITI advances the Government of Malaysia’s agenda of liberalisation, paving the way for
a more competitive automotive industry for domestic, regional and global markets
The National Automotive Policy (NAP) was introduced on 22 March 2006 to facilitate the
required transformation and optimal integration of the local automotive industry into regional
and global industry networks within the increasingly liberalised and competitive global
environment. The NAP is the main thrust for the formulation of the strategic directions of the
industry under the Third Industrial Master Plan (IMP3), 2006-2020.
Three and a half years after its introduction, the National Automotive Policy (NAP) has been
reviewed, resulting in new policies that will foster a more competitive market for local and
international companies. In line with the Government of Malaysia’s commitment to liberalisation
and the “People First” concept, the NAP Review provides further benefits for consumers in
terms of safety and environmental protection.
1- Through establishing National Automotive policy as a road map for developing the
2- Taxes for importing the foreign car and automotive part (CKD)
manufacturers.
5- Set a high level of standard for increasing safety and environmental friendly product
6- Strategic Partnership for hiking their quality and competitive advantage and getting more
market share for avoiding the entry.
7- Providing some key resource in a cheaper price for national companies such as proton.
8- Exempting proton from import duties on CKD kits which lead to 20%-30% cheaper price
of their product
review were to ensure orderly development as well as long term competitiveness and capability
of the domestic automotive industry as a result of market liberalisation;
foster the development of the latest, more sophisticated technology in the domestic
automotive industry;
The new policies and measures under the NAP Review are expected to provide significant
contribution to the overall growth of the industry and the country. Emphasis will be given in
attracting investments in high value-added manufacturing activities using latest and high
technology. The opening up of Manufacturing License (ML) for manufacturing and assembling
activities in the selected segments particularly for luxury cars and hybrid/electric vehicles will
encourage new investments and expansion of existing investments in the country. Currently, the
hybrid/electric segment is still very new and has the potential to be promoted and developed in
this region. With the appropriate incentives offered by the Government, Malaysia would be able
to attract OEMs to move their operations into Malaysia. The emphasis on safety and
environment aspects under the NAP Review will ensure the continued development of the
domestic automotive industry. The phasing-out of imported used automotive products and
introduction of mandatory standards for parts and components and standards for fuel and quality
will spur the development of the automotive industry in the long run. As one of the measures to
enhance the competitiveness and ensuring long-term viability of the national car manufacturer.
a strategic partnership between PROTON and a global established OEM will be encouraged.
This partnership has to ensure:
increase in exports and make Malaysia as a production hub for the region;
PROTON brand name and its domestic market share for specific segments are preserved.
Malaysia is committed in its obligation under ASEAN and WTO. Therefore, the NAP
Review has also taken into consideration Malaysia’s commitments under both ASEAN
and WTO. Malaysia will continue to implement its commitments under FTAs on the
removal and reduction of import duties for automotive products.
The termination of AP system by 2015 will provide a clear roadmap and as an interim period for
the AP holders to diversify and venture into other businesses. As announced in the Budget 2010,
each Open AP issued will be charged at RM10,000. A fund will be established from the income
collected and will be used to assist Bumiputera entrepreneurs in undertaking, among others, the
following areas/activities:EMBARGOED, 28 OCTOBER 2009.
Several new policies and measures, covering licensing, duties, incentives, technology,
environment, safety, standards and regulations are being introduced under the NAP review, with
the aim of fostering a more competitive industry and freer market. The new policies include:
• The tax exemption on statutory income for manufacturers in the automotive industry is
enhanced:
- from 10 to 30 per cent of the value of increased exports, provided the goods attain at least 30
per cent value added; and
- from 15 to 50 per cent of the value of increased exports provided that the goods attain at least
50 per cent value added.
III. Import and Excise Duty for Complete Built-Up (CBU) and Complete Knocked-Down
(CKD)
The rates of import duty (Most Favoured Nation-MFN) and excise duty for CBU and CKD
vehicles are maintained (Annex).
I. Better Incentives for Critical and High Value-added Parts and Components Production
Promoting the production of critical and high value-added parts and components is a crucial
scheme to increase the country’s human and technological capital and contribute to long-term
development goals. Companies manufacturing transmission systems, brake systems, airbag
systems and steering systems are eligible for better fiscal incentives i.e Pioneer Status (PS) of
100 per cent fiscal deduction for 10 years or Investment Tax Allowance (ITA) of 100 per cent
for five years.
II. Promote Hybrid and Electric Vehicles and Development of Related Infrastructure
Investing in the development of hybrid and electric vehicles bears the benefits of the acquisition
of new, high end. technology and the promotion of a more sustainable energy policy. A
comprehensive mix of fiscal incentives, duty exemptions and customised training and R&D
grants was included in the NAP Review to maximise returns on investment.
3 Current measures Under the 2009 Budget, imports of CBU hybrid cars are:
- 50 per cent exemption on excise duty for locally assembled/manufactured vehicles or provision
of grant under the Industrial Adjustment Fund (IAF);
- PS of 100 per cent for 10 years or ITA of 100 per cent for 5 years for manufacture of selected
critical components supporting hybrid and electric vehicles, such as:
o electric motors;
o electric batteries;
o Battery Management System;
o inverters;
o electric air conditioning;
o air compressors;
- additional attractive, customised incentives will be considered based on proposed activities.
• The Ministry of Energy, Green Technology and Water will draw up a roadmap to develop the
infrastructure for electric vehicles.
A new strategic partnership between PROTON and a globally established Original Equipment
Manufacturer (OEM) will be established to enhance PROTON’s competitiveness in a global
market and its long term viability.
G. EFFECTIVE DATE
The new policies and measures will be effective from 1 January 2010. MITI will coordinate
with the relevant ministries and government agencies on the follow-up actions for the
implementation of the NAP Review.
Before discussion about pricing strategy in automotive industry in Malaysia it could be helpful if
we know a little more about their type:
An organisation can adopt a number of pricing strategies. The pricing strategies are based much
on what objectives the company has set itself to achieve.
Penetration pricing: Here the organisation sets a low price to increase sales and market share.
Once market share has been captured the firm may well then increase their price.
Skimming pricing: The organisation sets an initial high price and then slowly lowers the price
to make the product available to a wider market. The objective is to skim profits of the market
layer by layer.(price discrimination for minimizing the consumer surplus)
Competition pricing: Setting a price in comparison with competitors. Really a firm has three
options and these are to price lower, price the same or price higher.
Product Line Pricing: Pricing different products within the same product range at different
price points. An example would be a automobile manufacturer offering different car with
different features at different prices eg A Van and sedan model. The greater the features and the
benefit obtained the greater the consumer will pay. This form of price discrimination assists the
company in maximising turnover and profits.
Psychological pricing: The seller here will consider the psychology of price and the positioning
of price within the market place. The seller will therefore charge 99p instead £1 or $199 instead
of $200. The reason why this methods work, is because buyers will still say they purchased their
product under £200 pounds or dollars, even thought it was a pound or dollar away. My favourite
pricing strategy.
Premium pricing: The price set is high to reflect the exclusiveness of the product. An example
of products using this strategy would be Harrods, first class airline services, Porsche etc.
Optional pricing: The organisation sells optional extras along with the product to maximise its
turnover. This strategy is used commonly within the car industry as it found out when purchasing
my car.
Cost Based Pricing: The firms takes into account the cost of production and distribution, they
then decide on a mark up which they would like for profit to come to their final pricing decision.
Cost Plus Pricing: Here the firm add a percentage to costs as profit margin to come to their final
pricing decisions. For example it may cost £100 to produce a widget and the firm add 20% as a
profit margin so the selling price would be £120.00
Pricing Strategy in Automotive industry in Malaysia:
Like any other industry in automotive industry the pricing strategy is a combination of
Competition pricing: (base of the competitor price) and Product Line Pricing (base of the cos
of production) or most common strategy is Optional pricing in which manufacturer selling their
product base of the option of customers ,or Cost Based Pricing,in which companies decided
about their proft and markup and selling price.
In 20 November 2007, Proton announced that talks regarding any partnership with Volkswagen
Group had ended with immediate effect, citing improving sales over the year, a favorable export
outlook, and confidence in management turning around the company without external
collaboration. This unexpected announcement resulted in a 19% overnight drop in Proton's
share price to their lowest value in seven years, due to the market's perceived uncertainty about
the future financial viability of the company in an increasingly competitive local and world
market. Proton did however state that they may resume talks about collaborating with other
manufacturers at later unspecified dates.
Appendix:
A) Motor Cars (Including Station Wagons, Sports Cars and Racing Cars)
LOCAL
IMPORT DUTY
TAXES
CBU CKD MSP CBU & CKD
Engine ASEAN ASEAN ASEAN
Excise Sales
Capacity MFN MFN MFN
Duties Tax
(cc) CEPT CEPT CEPT
< 1,800 30% 0% 10% 0% 10% n.a 75% 10%
1,800 -
30% 0% 10% 0% 10% n.a 80% 10%
1,999
2,000 -
30% 0% 10% 0% 10% n.a 90% 10%
2,499
Above
30% 0% 10% 0% 10% n.a 105% 10%
2,500
Summary of Sales & Production Data
References:
1- MAA, M. A. (2011, March 21). PRODUCTION & SALES FOR FEBRUARY 2011 (Press Release).
Retrieved 4 14, 2011, from maa.org.my:
http://www.maa.org.my/pdf/PressReleaseforfeb2011.pdf
2- Malaysian Automotive Association (MAA). (2011, March 21). PRODUCTION & SALES FOR
FEBRUARY 2011 (Press Release). Retrieved 4 14, 2011, from maa.org.my:
http://www.maa.org.my/pdf/PressReleaseforfeb2011.pdf
3- Malaysian Automotive Association. (2008). DUTIES & TAXES ON MOTOR VEHICLES. Retrieved 4
14, 2011, from maa.org.my: http://www.maa.org.my/info_duty.htm
4- Malaysian Automotive Association. (2008). Summary of Sales & Production Data. Retrieved 4 14,
2011, from maa.org.my: http://www.maa.org.my/info_duty.htm
5- Review of National Automotive Policy. (2009, October 28). Ministry Of International Trade and
Industry. Retrieved 4 14, 2011, from maa.org.my:
http://www.maa.org.my/pdf/MEDIA_RELEASE_NAP_Media_281009.pdf
Project
Topic: Consider any one of the industries in Malaysia and analysis the market structure, market
power, and its pricing strategies and critically examine entry barriers in the industry.