KUALA LUMPUR (April 15): EP Manufacturing Bhd (EPMB) said it has teamed up with China-based BAIC Motor Corporation Ltd to assemble and manufacture BAIC's authorised model vehicles in Malaysia.
The auto parts maker said its wholly-owned unit PEPS-JV (Melaka) Sdn Bhd (PJVM) had a week ago signed an agreement with BAIC, which is part of Beijing Automotive Group Co Ltd, a Fortune Global 500 company and one of China’s largest carmakers.
Under the 10-year agreement, PJVM's responsibilities include assembling and manufacturing the vehicles in Malaysia, ensuring that the assembly plant has a capacity of at least 5,000 vehicles per year by Sept 1, and at least 10,000 vehicles per year by March 1 next year, said EPMB in a bourse filing on Monday.
PJVM must also procure all necessary devices, equipment, permits, or approvals for vehicle assembly and manufacturing and bear relevant expenses.
BAIC's obligations, meanwhile, involve authorising PJVM to assemble and manufacture the vehicles, providing technical support and training for assembly and manufacturing, and overseeing the assembly process.
EPMB said the agreement replaces a memorandum of understanding between the group and BAIC entered into in August last year, for the development of BAIC's BJ40P and X55II sport utility vehicles and right-hand drive electric vehicles for Malaysia and other Southeast Asian right-hand drive markets.
EPMB noted that the latest agreement allows vertical integration of the group's operations to tap into the expanding automotive market, expanding its income stream, and enhancing the group's financial stability and long-term prospects.
"The strategic collaborations with original equipment manufacturers from China signify our commitment to charting a course towards better profitability for our stakeholders," added EPMB executive chairman Hamidon Abdullah in a statement.
Notably, EPMB announced an investment of over RM100 million in October last year to construct an automotive manufacturing plant in Melaka for BAIC and Great Wall Motor vehicles at the Hicom Pegoh Industrial Park in Alor Gajah.
The facility, developed in multiple phases, is expected to create about 1,000 new jobs once fully operational, and will initially produce up to 30,000 vehicles annually.
Shares in EPMB closed 1.5 sen or 2.21% lower at 66.5 sen on Monday, giving the group a market capitalisation of RM146.49 million.