BUSINESS

Chinese Automakers Urged to Use Malaysia as a Global Launchpad

Published: Dec. 24, 2024 7:34 p.m. GMT+8

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A Smart #1 Pro electric vehicle, developed by Geely and Mercedes-Benz, is unveiled in Kuala Lumpur, Malaysia, on Nov. 21, 2023. Photo: VCG

As Chinese carmakers accelerate their expansion into Malaysia amid cutthroat competition at home and growing trade tensions with the West, a Malaysian official is advising them to use the country as a launchpad into the rest of Southeast Asia, and beyond.

“If they’re focusing on this Malaysian market, the business model is wrong. They need to look at least at the ASEAN region,” Malaysian Investment Development Authority (MIDA) CEO Sikh Shamsul Ibrahim Sikh Abdul Majid told Caixin at the Malaysia-China Summit in Kuala Lumpur last week.

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Chinese carmakers are expanding in Malaysia as a strategic entry point into Southeast Asia to avoid domestic competition and Western trade tensions, with suggestions to target the broader ASEAN region.
Malaysia's EV market faces challenges like limited infrastructure and dependency on fossil fuels, while the government aims to build more charging stations and increase EV sales to 20% by 2030.
Collaborations, such as Chery's local assembly and Geely's partnership with Proton, aim to boost local manufacturing and export capacity; Chinese brands Chery and BYD made Malaysia's top-10 car sales list.

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Who’s Who

Chery Automobile Co. Ltd.: Chery Automobile Co. Ltd. has expanded into Malaysia, establishing a factory in Shah Alam, where it assembled its first locally-produced Jaecoo J7, a premium off-road SUV. It is one of only two Chinese-owned brands that made Malaysia's top-10 car sales list this year, ranking fifth. The company's move is part of a broader strategy by Chinese carmakers to avoid intense competition and high tariffs in their domestic and Western markets, respectively.

Zhejiang Geely Holding Group Co. Ltd.: Zhejiang Geely Holding Group Co. Ltd. is partnering with the major shareholder of Malaysian carmaker Proton Holdings Bhd to develop an auto hub for next-generation vehicles and EVs in Tanjung Malim. The hub aims for an annual production capacity of 500,000 vehicles by 2035, with 50% for export. Additionally, Geely plans to establish a supply chain producing 1 million sets of parts, with 50% serving the global market. Geely aims to cover the entire value chain in Malaysia.

Proton Holdings Bhd: Proton Holdings Bhd, a Malaysian carmaker, is partly owned (49.9%) by China's Zhejiang Geely Holding Group. Geely is partnering with Proton's major shareholder to develop an auto hub in Tanjung Malim focused on next-generation vehicles and EVs, with a goal of producing 500,000 vehicles annually by 2035. This hub intends to supply 50% of its production for export, and Geely plans to build a smart EV base covering the whole value chain in Malaysia.

BYD Co. Ltd.: BYD Co. Ltd. has launched two EV models in Malaysia through a local distributor and is considering investing in a factory there, depending on market share. Despite facing brand loyalty challenges from established Japanese manufacturers, BYD sees potential growth in electric forklifts. It is one of the two Chinese-owned brands in Malaysia's top-10 car sales list, ranking 10th.

Sunway Group: Sunway Group is a Malaysian construction machinery manufacturer mentioned in the article. Gyinee Lim, a sales manager at Sunway Group, commented on the competitive landscape for EVs in Malaysia, noting that BYD's electric forklifts have the best growth prospects. This is due to the high brand loyalty of Japanese brands in the traditional fuel vehicle market, making it challenging for newcomers to make inroads.

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What Happened When

June 2024：: Chery Automobile Co. Ltd.'s factory in Shah Alam rolled out its first locally-assembled Jaecoo J7.

June 2024：: Zhejiang Geely Holding Group Co. Ltd. announced a partnership with Proton Holdings Bhd to develop an auto hub with a planned capacity of 500,000 vehicles by 2035.

January 2024 to mid-December 2024：: Sales of hybrids, pure EVs, and e-bikes accounted for just 5.1% of total vehicle sales in Malaysia.

Last week, December 2024：: Malaysian Investment Development Authority CEO Sikh Shamsul Ibrahim Sikh Abdul Majid spoke at the Malaysia-China Summit.