This article first appeared in The Edge Malaysia Weekly on December 22, 2025 - December 28, 2025
PERUSAHAAN Otomobil Kedua Sdn Bhd (Perodua), which just launched two car models, is considering buying Tan Chong Motor Holdings Bhd’s (KL:TCHONG) Serendah plant for about RM500 million, executives privy to the deal tell The Edge.
This comes after Perodua Sales Sdn Bhd signed a letter of intent (LOI) with Tan Chong Motor Assemblies Sdn Bhd (TCMA) for the latter to provide services for Perodua’s battery electric vehicle (EV), the Perodua QV-E.
“Perodua is leasing a capacity of 30,000 units per year at Tan Chong’s Serendah facility, which has a production capacity of around 40,000 units per year. It is also looking at the possibility of acquiring the Serendah plant,” says one of the executives.
The capacity leasing deal is expected to contribute an estimated RM80 million to Tan Chong, the executives say. The plant is located about 3km from Perodua’s facilities in Serendah, which is a 10-minute drive north of Rawang. Both facilities are in the Sungai Choh Industrial Area, which is located between Rawang and Serendah.
On Nov 14, Tan Chong announced that TCMA has signed an LOI with Perodua Sales that sets out the key agreed principles of their collaboration on Perodua’s EV manufacturing and assembly.
TCMA will provide electro-deposition coating and painting line services, as well as rental and use of certain designated assembly lines to Perodua Sales. The parties will enter into definitive agreements on dates mutually agreed upon.
The partnership will allow Tan Chong to optimise its existing assembly plant capacity to enhance operational efficiency and maximise asset utilisation, as well as expand the group’s participation in the EV segment.
While Tan Chong and Perodua have yet to enter into an agreement for the capacity leasing of the former’s Serendah plant, talk of Perodua considering an acquisition of the plant shows its need for production capacity to meet demand.
Last week, the second national carmaker launched the Traz, an urban SUV, at a starting selling price of RM76,100.
Prior to that, on Dec 1, it launched the QV-E — Malaysia’s first home-grown EV. Perodua projects an initial production of 500 units a month, before ramping it up to over 2,000 units a month.
However, the automaker’s plants are already operating beyond their full capacity of 320,000 units annually. It sold 368,100 units in 2024, and is confident of hitting 359,000 units this year.
This necessitates Perodua looking externally to meet the demand for its models, which include the popular Bezza A-segment sedan and Myvi B-segment hatchback. The Bezza alone sells 100,000 units a year, almost the same number as all of Toyota’s models in Malaysia.
Tan Chong, meanwhile, has been struggling with low sales and underutilisation of its plants in Serendah and Segambut. The company has a total production capacity of 65,000 units a year, according to research analysts.
When asked to comment, Tan Chong, which assembles and distributes Nissan models in Malaysia, Myanmar, Laos and Cambodia, referred The Edge to publicly available documents for accurate and comprehensive details of the partnership. Perodua, meanwhile, declined to comment.
In 2024, only 7,785 units of Nissan cars were sold in Malaysia. TCMA also assembles the Nissan Serena S-Hybrid MPV for the Thai market. Kenanga Research in a Nov 26 report puts Tan Chong’s production capacity utilisation rate at 13%.
“This involves both its Segambut plant (capacity of 20,000 units/year for TQ Wuling light trucks, GAC vehicles and TQ Wuling Bingo EV) and its Serendah plant (capacity of 45,000 units/year for all Nissan models and rental assembly for all-new Perodua EV),” it says.
The contract to provide assembly services for Perodua is seen as positive for Tan Chong, which has been loss-making since the financial year ended Dec 31, 2020 (FY2020).
“We are also positive on Tan Chong’s recent LOI with Perodua to rent out some of its assembly lines for the latter’s EV project,” says RHB Research in a Nov 24 report.
“As Tan Chong retains its traditional automotive model of owning the production lines, this may help the group manage its fixed costs better by optimising the existing assembly plant’s capacity,” the research outfit says.
In the first nine months of 2025, Tan Chong saw its net loss shrink to RM114.3 million from a loss of RM146.11 million in the same period last year, while its revenue increased 3.23% to RM1.62 billion.
Kenanga Research forecasts a net loss of RM185.5 million for Tan Chong in FY2025 and a net loss of RM164.3 million in FY2026. RHB Research, meanwhile, forecasts a net loss of RM166 million for FY2025 and a net loss of RM107 million for FY2026.
Despite the challenges faced, Tan Chong has signed an agreement with SAIC GM Wuling Automobile to locally assemble the Tan Chong-branded TQ Wuling Bingo EV, an entry-level compact EV with a starting price of RM67,800.
Over the last one year (to Dec 18), Tan Chong’s share price has lost 33.33% of its value to 56 sen. At that level, its market value is 38% below its 52-week high of 90.5 sen on July 25.
Kenanga Research has assigned a target price of 30 sen for Tan Chong with an “underperform” call, given its insignificant 1% share of the total industry volume, its lack of new launches while its competitors have successfully launched all-new models, and its inability to raise prices to pass on rising production costs.
RHB Research, however, assigned a “buy” call on Tan Chong with a target price of RM1.08 as the disposal or development of its land bank could unlock rerating potential for the group, although there is still no clarity on the timing, location or size of potential land sales.
Save by subscribing to us for your print and/or digital copy.
P/S: The Edge is also available on Apple's App Store and Android's Google Play.