The Malaysian auto market is dominated by Malaysia’s national car Proton, Toyota and Perodua which in 2008 and 2009 accounted for 76.6% of the vehicles sold annually. In the past 2 years the statistics shows that 32.2% of Perodua, 28.6% of proton and 15.8% of Toyota was sold. Thus it can be concluded that they are dominating car firms in Malaysia. These firms have reasonable prices, therefore affordable by students, non workers and workers. Also it is cheaper to service these three cars compared to other cars like BMW, Mercedes Benz, and Ford and so forth. In addition is easy to find the parts of these cars in Malaysia that is why people prefer to buy them 15

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GOVERNMENT REGULATIONS 16

CRISIS FACED BY THE INDUSTRY 17

CONCLUSION 18

REFERENCES 19

HISTORY

CAR INDUSTRY IN MALAYSIA

Malaysia is one of the smaller Southeast Asian markets for motor vehicle production and sales and ranks behind South Korea, the People’s Republic of China, Taiwan, Thailand and Indonesia. Since 1985, when the first made-in-Malaysia car, Proton rolled off the production line, it have been spearheading Malaysia’s ambitious plan to become one of the world’s most advanced industrial societies by the year 2020. To date over one million Protons have been sold in 51 countries throughout the world. By contrast, Malaysia’s motor vehicle industry actually remains heavily protected with import duties ranging from 140 to 300 percent on cars, and very high local content requirements. Malaysia also maintains an import ban on motor to attract customers. A threat identified is AFTA in the year 2003. It is mostly believed that 90% of Proton buyers choose Proton over the imports because of price. Once you lift the tariff as it will be in 2003, you will lose the cash flow from the tariff and also loose tremendous market share for the Proton. Therefore, the car market industry which has been monopolized by Proton will certainly change in the next years to come.

Export of Cars

Malaysia’s cars are currently exported t over 50 countries in Europe, Asia and South America including Australia, Turkey, Russia, India, Laos, Egypt and Argentina. Malaysia’s firms export of cars started in 1986 and amounted 25 units which were exported to Bangladesh. In 1987 the export markets expended to Brunei, Malta, New Zealand and Sri-Lanka. The number of units exported in 1987 totaled 443 units. First exports of proton in Europe started in 1988 when it exported 540 units of Proton Saga to the Republic of Ireland. A year later, in 1989 proton started exporting its cars to UK, Singapore and Jamaica. Sales to UK and Ireland totaled 10 500 units during this year and since then the UK is the largest export market of Proton. Proton’s distribution in the UK is handled by its subsidiary, Proton Cars (UK) Ltd. UK export market significantly contributed to the improvement of proton’s sale from just 25 units in 1986 to 20,269 units in 1993, from these 20 269 units total exports to the UK and Ireland amounted to 17 440 (86%) units. But Malaysia’s total exports of Proton fell below 15 000 units in 1994 following a crisis between the Malaysian and the UK governments over the Pergau dam and certain defense that year exports of Proton to UK fell to 10 169 units (about 68% of Malaysia’s total exports) and since then and up to 1995-97 Proton’s exports to UK and Ireland accounted to 10 000 units. But the sales volume dropped to 7 000 units per year during the 1998-99 when proton exported less to the UK in order to minimize the lower margins of its sales to the country. In UK Proton is eligible for tax breaks under the EU generalized system of preference but it has still to enter into such car markets as Germany, the US and Japan.

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The above table shows increasing trend in exports since 1994 up to 1997, rising from 14,813 units to 25,900 units. However, in 1998, a year when the economy was down in recession export of cars significantly dropped and this trend continued in 1999.

Import of Cars

Imports of cars, which were on a high trend during 1995-97, fell in 1998 due to the economic slowdown that caused the low income in the country. During this year, imports of motorcars completely knocked down (CKD), which usually make up more than 95% of the total import value of cars in the country fell to 145 217 units representing a decline of 60% from 1997’s total of 363 201 units. As for the motorcars completely build-up (CBU), their imports slowed down to 1 352 (comparing to 5 649 in 1996) due to the mentioned economic crisis but significantly increased to 5 470 units due to the economic recovery. . Imports of CBU and CKD cars together constituted about 85% of the total imports of motor vehicles in the country.