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  • Madani Sahari

Continued resilience of the auto sector

Earlier this month, the Ministry of International Trade and Industry (MITI) and Malaysia Automotive Robotics and IoT Institute (MARii) announced the performance of the automotive industry in 2019, as well its outlook in 2020.


Overall, it was another year of holistic growth for the sector - the industry recorded its highest export figures totaling RM15.45 billion, a year on year increase in Total Production Volume (TPV) and 65,388 new jobs created within the manufacturing and aftermarket sectors.


Industry and consumer participation also improved, with 423 parts and components manufacturers attaining at least a Level 3 Supply Chain Level, and the most significant achievement was a record 87.58% penetration of Energy Efficient Vehicles registered on the roads - a strong showing of Malaysian support for vehicles that bring fuel economy and environmental preservation to the local ecosystem.


This industry has grown to become a sector that not only has proven its resilience, it has also emerged as a stronger contributor to Malaysia's industrialisation drive - more and more meeting its intentions for local participation in science, engineering, and technology.


As we transition from the NAP2014 to the NAP2020 - I'd like us to keep our feet to the ground and address the lessons we've learned, and the new challenges we face in this new decade.


A key lesson from the NAP2014 was our shortcomings in some areas, particularly in TIV and CBU exports.


When the NAP2014 was formulated, there were certain assumptions that were made. While the growth expectations were admittedly ambitious, particularly in the case of TIV growth, these targets were predicated on key developments such as voluntary end-of-life policies (not to be confused with scrap policies), growth of national brands.


We also looked at the growth of vehicle ownership ratios (that were low in many countries compared to Malaysia), in lieu of the development of transportation infrastructure among ASEAN countries such as Indonesia, Thailand, and Vietnam.


However, the second half of the decade proved challenging for the market, as the US dollar appreciation circa 2015 caused economic uncertainty to ripple within the region.


Despite increased usage of EEVs in the latter half of the decade, surging fuel prices also contributed to fickle decision making in vehicle purchases, and slower-than-expected growth of car ownership ratio in neighboring countries affected CBU exports from Malaysia.


The main lesson was also a shift of focus in ownership models seen in global markets. While vehicle technologies started shifting towards electrification, advances in-vehicle connectivity also forced a shift in business thinking within the global players towards new models of ownership, seen in car-sharing, ride-hailing, and mobility as a service.


By the end of the decade, while targets set were noble, the goalposts had to be shifted in order to maintain competitiveness. It was these lessons that were carried into the formulation of the new automotive policy and vision seen in the NAP2020.


While new targets were set – the principles of aiming high are maintained in the new policy. Most importantly, the policy is now looking even further ahead – doubling its foresight to a full decade into the future.


This year, a special focus will be given to enhancing exports from a holistic point of view.

While CBU exports remain an important target, the exponential increase of parts and components will be an exciting figure to watch this year, together with the emerging remanufacturing sector.


New investments will also be encouraged and monitored in relation to new services aligned with the NAP2020.


The industry can also begin to plan their business models around the expected establishments of new technology development centres that include the NxGV Test Bed, Electric Vehicle Interoperability Centre (EVIC), as well as new talent development programmes in new areas that are in line with NxGVs, MaaS, and Industrial Revolution 4.0.


These developments are all-encompassing and expanded beyond 4-wheelers to include technology development for commercial vehicles and also 2-wheelers.


While we have learned to be resilient in the past, it is now time to look in the future. Such a future is changing, and our experience from the last half-decade will hopefully prepare us to face the up-coming decade of rapid change.


The writer is the chief executive officer of Malaysia Automotive, Robotics and IoT Institute (MARii).

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MAdani Sahari

Chief Executive Officer of the 

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