KUALA LUMPUR: With stiffer competition looming, Malaysia's biggest car manufacturer in terms of sales volume, Perusahaan Otomobil Kedua Sdn Bhd (Perodua), is taking every step to protect its turf including making a bigger inroad into the used car segment.

The company, which set up a Pre-Owned Vehicle (POV) centre in Subang, Selangor about six months ago, plans to open more POV centres in the country to provide more value-added services to its customers and to meet increasing demand for used Perodua vehicles.

Perodua CEO Datuk Aminar Rashid Salleh told The Edge Financial Daily yesterday the company plans to open six POV centres across the country, with at least three by the end of this year.

The next centre will open in Penang within a few months.
"We want to facilitate the trade-ins ourselves as there is high demand for used Perodua vehicles. We also take in other brands and wholesale them to used car dealers.
"At the moment, the purpose of the POV centres is to get new clients and retain our existing customer base. It's not a profit centre,” he added.

The second national car maker will set up retail operations for its used vehicles as early as next year.

Aminar said Perodua-trained valuers will provide the certification and quality assurance for all Perodua cars traded in at the POV centres prior to being put up on sale.
"We will offer a competitive price for our used cars, while providing peace of mind to our customers,” he said.

Currently, Perodua used cars comprised over 70% of total vehicles traded in at its sole POV centre in Subang.

According to Perodua director of sales and marketing Zahari Husin, the used car segment is steadily growing as buyers seek cut-price alternatives for vehicle purchases.
"We have always targeted first-time buyers, but we intend to expand our presence by entering the used car segment as well,” he said.

Aminar stressed that the company's performance in the niche compact vehicles segment is dependent on the volume of vehicles sold. “In this industry, our margins are small. So we need large (sales) numbers.”

The POV, he noted, is a conduit to more potential new buyers and will help improve sales of new Perodua cars.

The company targets to sell 194,000 vehicles this year, which comprise the Alza, Myvi and Viva.

Last year, Perodua sold 189,137 vehicles, or 30.1%, of the total industry volume of 627,753 units, according to Malaysian Automotive Association (MAA) figures.

Perusahaan Otomobil Nasional (Proton) came in a distant second, with 141,121 vehicles sold or 22.5% of the TIV.

Toyota was the top make for non-national cars, selling 105,151 vehicles (not including the 1,471 luxury vehicles sold under its Lexus brand.)

Perodua chief Aminar said there is still some way to go before the domestic vehicle market becomes saturated. “For us, there are still opportunities in the domestic market. But we will have to focus on our exports as well,” he noted.  

The company, like any other vehicle manufacturer, is targeting the Asean Economic Community (AEC) market when it opens its doors in 2015. The 10-member AEC will have a total regional population of about 600 million people.

Aminar says: “Our exports are 4% at the moment. When the AEC comes into the picture, we hope to grow this figure to 10%. We definitely intend to take advantage of the AEC.”

In preparation for the AEC market, Perodua is investing RM790 million to set up a new state-of-the-art manufacturing facility adjacent to its existing manufacturing facility in Rawang, Selangor. It will have improved systems and new technology sourced from its Daihatsu partner in Japan.

Aminar said the new plant would be 70% automated as well as environmentally friendly. Compared to the existing plant which needs over 5,000 employees to operate, the new plant would need only 1,200 personnel.

It will be able to produce 100,000 vehicles per annum on a one-shift cycle.

According to a note by UOB Kay Hian yesterday, a weaker ringgit will put a dent on automobile manufacturers' margins in the near term.

"Automobile manufacturers usually hedge their forex needs forward, and hence will feel the effect of a weaker ringgit in subsequent months,” it said.

The research house said consumers had been holding back their purchases prior to the 13th general election and expects a recovery in car sales to start next month.

This article first appeared in The Edge Financial Daily, on June 26, 2013.