KUALA LUMPUR (Oct 18): EP Manufacturing Bhd (EPMB) has signed a memorandum of understanding (MOU) with the Malaysian unit of China’s Great Wall Motor Co Ltd (GWM) to look into the production and assembly of selected GWM vehicles locally.

The two parties are “poised to propel their collaboration towards a definitive agreement in the coming three months”, they said in a joint statement on Wednesday.

“Should the two parties reach an agreement, EPMB expects to kick off the collaboration from 2024. It is anticipated that EPMB's production of GWM vehicles will gradually ramp up every year, reaching 20,000 units by 2028,” they added.

The MOU was inked between EPMB’s wholly-owned unit PEPS-JV (Melaka) Sdn Bhd (PJVM) and Great Wall Motor Sales Malaysia Sdn Bhd.

The local assembly of GWM models is expected to include the brand’s sport utility vehicles, as well as pickup and electric vehicles (EVs).

GWM Malaysia managing director Mike Cui said the potential collaboration is set to be the group’s first completely knocked-down (CKD) project in the Asean region.

“GWM Malaysia is delighted to witness the exciting moment together with EPMB, a reputable Tier-1 automotive supplier in Malaysia. As GWM’s first CKD project in Asean, this will be a significant footprint in GWM's global production landscape,” said Cui.

Noting that GWM has a presence in all major Asean automotive markets, EPMB and GWM said the collaboration is expected to play a significant role in GWM Malaysia's plan in the Asean region to further establish its market presence with a comprehensive sales, after-sales, and service and maintenance infrastructure network.

“We are pleased to embark on this strategic alliance with GWM, a strong pickup brand in China with a strong global presence. We strive to foster a mutually beneficial collaboration with GWM, which will contribute to the future growth of both brands,” said EPMB group chief executive officer Ahmad Razlan Mohamed.

In a stock exchange filing, EPMB said GWM plans to anchor its Asean hub, sell right-hand-drive model products in Malaysia, and establish systematic and comprehensive sales, after-sales and service and maintenance infrastructure, with the direction to gradually progress towards local manufacturing and assembly of the group's vehicles.

PJVM will be responsible for the assembly and manufacturing of the vehicles, and the company has been granted a manufacturing licence by the Ministry of Investment, Trade and Industry for the assembly of these products.

PJVM will also be responsible for the localised production of parts of the selected model products in Malaysia, with the intention to gradually increase the proportion of localised parts to obtain policy support from the Malaysian government, and to take advantage of Asean free trade agreements.

GWM will be responsible for distribution and trading, incentive applications and importation of CKD packs for all vehicles under GWM's brands in Malaysia.

In a separate announcement on Wednesday, EPMB announced that Razlan is acquiring a 70% stake in the group's two-wheel EV manufacturing subsidiary EP Blueshark Sdn Bhd for RM1.

EPMB said the disposal aims to enhance its position in meeting regulatory requirements for approved permit applications.

"Besides, it fosters a stronger commitment from the group CEO towards achieving the EPMB group’s long-term strategic goals in its EV ventures," it said.

The remaining 30% stake in EP Blueshark will continue to be owned by EP Equity Sdn Bhd, which is wholly-owned by EPMB.

EP Blueshark was incorporated in April last year. It recorded a net loss of RM645,000 for the nine-month period ended Dec 31, 2022, on the back of a revenue of RM2.27 million, with net assets of RM1.86 million.

For the nine-month period ended Sept 30, 2023, EP Blueshark posted a net loss of RM3.23 million, with net liabilities of RM1.37 million. Revenue was a negative RM139,000, due to reversal of sales on product defects.

Razlan was appointed as EPMB's group CEO on March 20 this year. He was not listed as the group's 30 largest shareholders in the latest annual report.

EPMB's largest shareholder is executive chairman Hamidon Abdullah and his family, who collectively own some 15.99% stake in the group, followed by HKFAEX Group Ltd's 6.2% stake.

Shares in EPMB closed two sen or 2.4% lower at 82 sen on Wednesday, giving the group a market capitalisation of RM180.63 million.