ANALYSIS: Malaysia’s Naza: how to build a car company from scratch
27 June 2006 | Source: just-auto.com editorial team
A new Malaysian automaker is poised to challenge the country's 'national car' producers Proton and Perodua, which have suffered mixed fortunes over recent years. Unlike its established rivals, Naza is not state-assisted. Instead it's an entrepreneurial business that has grown from humble origins as an importer and retailer of used cars, starting in 1975. But in the past few years Naza has taken a fast-track to growth that has involved taking a very innovative approach, writes Mark Bursa.
Naza has grown rapidly into a Malaysian automotive powerhouse. It's one of the country's largest car retailers, with a national chain of highly sophisticated automall-style operations that would be the envy of any European or US dealer group. It has the rights to import Mercedes-Benz, Mazda, Peugeot and Kia cars to Malaysia - and its relationship with the latter two has led to it setting up assembly operations for both companies.
Indeed, its relationship with Kia has become so tight that it actually brands the Kia models it builds as Naza, and has the rights to do this across the ASEAN free trade area. And last month is announced itself as a manufacturer in its own right, with the launch of the Sutera compact hatchback.
Although Naza has not been granted "national car" status, it has friends in high places. Malaysian Prime Minister Datuk Seri Abdullah Ahmad Badawi, the successor to long-standing premier Mahatir Mohammad, is a strong supporter of Naza, because he hails from the same part of the country as Naza's founder Tan Sri SM Nasimuddin SM Amin.
At the launch of the Sutera, the prime minister urged Naza and Proton to "compete like brothers", and added that he "would not be jealous if Naza performed better than Proton". The comments can be interpreted as a coded kick up the backside for Proton. "I will be angry with Proton if they cannot be the best car maker," Badawi said.
Naza's Kia assembly operations are far from being screwdriver operations. The plant, at Gurun in north-west Malaysia, currently builds 40,000 Kias a year for Malaysia and other ASEAN markets, and Naza has a strong relationship with the Korean automaker. Naza has invested US$5.7 million in a state-of-the-art training centre for Kia, covering manufacturing, repair, servicing and sales through a 'model showroom'. The quality of this operation is so high that Kia has designated it as its official training centre for the Asia-Pacific region.
Naza builds four Kia models in Malaysia - the Carens compact MPV (sold locally as the Naza Citra) accounts for 45 percent of output; the Sedona MPV (sold locally as the Naza Ria) accounts for 25 percent, and the balance is split between the Sorento SUV and the Spectra compact sedan.
Before the end of 2006, production of the Picanto subcompact will also start at the plant, pushing output towards the plant's capacity of 60,000 units a year. The plant occupies a 140-acre site, and incorporates body welding shop, fully automated paint shop, assembly lines and pre-delivery inspection areas. There is also a test track and administration office. The plant employs around 1,000 workers.
Local content of Kias is rising thanks to 13 suppliers located on the same road as the plant. These supply large modules, including seats, dashboards, wheels, tyres and front-end modules. And local content will grow - there is land available to expand the plant, and a stamping shop is planned, which would reduce the need to import body panels from Korea.
Naza is taking a similar approach to building a local presence for PSA Peugeot Citroen. Peugeot 206 hatchbacks are built from CKD kits alongside the Kia models at Gurun, and these are supplied throughout ASEAN. Naza expects to build around 10,000 206s a year, for sale in Malaysia and other markets in Asia, mainly Indonesia and Thailand.
Previously PSA assembled for the region in Indonesia, but has switched to more stable Malaysia, said Dominique Monet, Peugeot's general director for ASEAN countries. The plan is to assemble 307 sedan and 206 sedan models in future as well - 307 sedan kits will come from Dongfeng Peugeot Citroen Automobiles in Wuhan, China. As with the Kia models, the Peugeots sold in Malaysia carry Naza badges, not Peugeot: the 206 is called the Naza 206 Bestari.
The expertise gained from the contract manufacturing operation is now being channelled into turning Naza into a vehicle producer in its own right, with its own range of cars, and sold worldwide. Construction work has commenced on Naza's third factory at a new site at Bertam near Penang - close to the Gurun plant - to build a range of new cars.
The first of these, the Sutera hatchback, has just gone on sale in Malaysia, and will be exported to a number of right-hand drive markets, including the UK, from 2007. Left-hand drive production will follow.
When it is completed in 2008, the US$356m Bertam plant will have a capacity of 100,000 cars - other Hafei-sourced models are also planned. The plant will follow the Gurun model, with local suppliers setting up on-site. Naza has allocated 100 hectares of land for vendors to set up their factories. Until Bertam is ready, the Sutera will be built at Naza's other plant at Pekan.
Again, Naza has taken an innovative, fast-track approach to developing the Sutera. In a groundbreaking deal, it has sourced the basic car from a Chinese manufacturer, Harbin Hafei, which has been making it in China for the past two years as the Hafei Lobo. The car itself was designed by Pininfarina in Italy, and is powered by 1.1-litre, 65bhp Daihatsu-derived engines. Lotus Engineering - a subsidiary of Naza's rival Proton - carried out ride and handling development, to a standard higher than Proton's own rival model, the Savvy.
Naza sources component sets for the Sutera from Hafei. But this is more than a CKD operation. Major components - stampings, engines, transmissions - come from China, but the rest of the car is made in Malaysia.
Indeed, Naza's own R&D centre made major changes while turning the Lobo into the Sutera - the interior is completely new, as are some of the front-end panels. All the exterior lights are different too; the Malaysian version is much more in tune with tastes in developed consumer markets compared to the more basic Chinese version.
This clever deal was brokered by a UK company - IM Group. Best known as the UK's Subaru, Daihatsu and Isuzu distributor, IM Group set up an office in Beijing in 2001 with a view to exploiting whatever business opportunities it could spot. The Naza-Hafei deal is the one of the first major deals brokered by this operation, which is headed by experienced businessman, and former political lobbyist, David Wall.
IM has taken a wider view of China rather than simply looking at potential vehicle import deals into Europe. Wall says the focus has been on making deals. "A lot of people spend all their time in China looking at opportunities. We say let's do the business." IM also helped a number of western organisations set up Chinese operations - including the UK Vehicle Certification Agency and UK-based locks manufacturer Lowe & Fletcher.
Wall and his team take a networking approach - indeed the Naza deal came about almost by chance, when IM's general manager of business development Martin Dalton was introduced to Tan Sri Nasimuddin by another contact from China.
Of course, vehicle import contracts are part of the mix - a by-product of the Naza deal is deal to import the Naza brand to the UK. And the IM Group Beijing office is in talks with a number of Chinese automakers, including Chery and Geely, with a view to exploring opportunities to do business.
--------------------------------------------------
Q&A: Tan Sri SM Nasimuddin SM Amin, founder and chairman of Naza Group
What's your ambition for Naza?
Within three years from now we will launch a model that is 100% our own. We are looking to follow the same direction as Hyundai and Kia. We have learned a lot from Kia and would like to follow their approach. We've learned from what they've done. We are also talking to other manufacturers about other models, and we are still talking to Hafei.
What about the lessons of Proton?
We don't follow Proton - we do our own thing. Proton maybe didn't take car of customer support - but we've learned how to do that from Kia. But competition with Proton is good. If you have no competition, you don't grow.
Would you like Naza to have National car status in Malaysia?
We'd like to be a national car company, but at the same time we'd like to prove to the Malaysian government what we can do for Malaysia. So we're trying to improve our exports. We started as a dealer and have grown in steps - moving up one step at a time.
How big can you become?
At the moment our turnover is about $2 billion US, and we'll build 60,000 cars year. The Sutera will add another 30,000 units next year, so we're growing steadily.
How well has the Sutera been received?
In the first week we have sold between three and four thousand units - it's a very good start. We can export this car and grow our volume. At the moment we are concentrating our exports on Indonesia, Thailand and India - local markets that have similar standards to Malaysia. When we have the volumes there, we will go to Europe.
What about establishing a new brand in Europe?
We've already done that here. When we started with Kia, we were selling 500 units a year. Last year we sold 37,000.
How come Kia lets you put the Naza brand on Kia cars?
There are some tax advantages in using our brand. But the Malaysian market is more inclined to a local brand, and Naza is well known and respected in Malaysia.
What are your plans for the Naza World multi-franchise car sales operation?
We have six in total across Malaysia, selling about 50-60,000 cars a year. And we have a Naza World in Indonesia as well. But we will need this kind of showroom in the future when the local AP import tax is abolished - by 2010 the market will be completely liberalised.
A new Malaysian automaker is poised to challenge the country's 'national car' producers Proton and Perodua, which have suffered mixed fortunes over recent years. Unlike its established rivals, Naza is not state-assisted. Instead it's an entrepreneurial business that has grown from humble origins as an importer and retailer of used cars, starting in 1975. But in the past few years Naza has taken a fast-track to growth that has involved taking a very innovative approach, writes Mark Bursa.
Naza has grown rapidly into a Malaysian automotive powerhouse. It's one of the country's largest car retailers, with a national chain of highly sophisticated automall-style operations that would be the envy of any European or US dealer group. It has the rights to import Mercedes-Benz, Mazda, Peugeot and Kia cars to Malaysia - and its relationship with the latter two has led to it setting up assembly operations for both companies.
Indeed, its relationship with Kia has become so tight that it actually brands the Kia models it builds as Naza, and has the rights to do this across the ASEAN free trade area. And last month is announced itself as a manufacturer in its own right, with the launch of the Sutera compact hatchback.
Although Naza has not been granted "national car" status, it has friends in high places. Malaysian Prime Minister Datuk Seri Abdullah Ahmad Badawi, the successor to long-standing premier Mahatir Mohammad, is a strong supporter of Naza, because he hails from the same part of the country as Naza's founder Tan Sri SM Nasimuddin SM Amin.
At the launch of the Sutera, the prime minister urged Naza and Proton to "compete like brothers", and added that he "would not be jealous if Naza performed better than Proton". The comments can be interpreted as a coded kick up the backside for Proton. "I will be angry with Proton if they cannot be the best car maker," Badawi said.
Naza's Kia assembly operations are far from being screwdriver operations. The plant, at Gurun in north-west Malaysia, currently builds 40,000 Kias a year for Malaysia and other ASEAN markets, and Naza has a strong relationship with the Korean automaker. Naza has invested US$5.7 million in a state-of-the-art training centre for Kia, covering manufacturing, repair, servicing and sales through a 'model showroom'. The quality of this operation is so high that Kia has designated it as its official training centre for the Asia-Pacific region.
Naza builds four Kia models in Malaysia - the Carens compact MPV (sold locally as the Naza Citra) accounts for 45 percent of output; the Sedona MPV (sold locally as the Naza Ria) accounts for 25 percent, and the balance is split between the Sorento SUV and the Spectra compact sedan.
Before the end of 2006, production of the Picanto subcompact will also start at the plant, pushing output towards the plant's capacity of 60,000 units a year. The plant occupies a 140-acre site, and incorporates body welding shop, fully automated paint shop, assembly lines and pre-delivery inspection areas. There is also a test track and administration office. The plant employs around 1,000 workers.
Local content of Kias is rising thanks to 13 suppliers located on the same road as the plant. These supply large modules, including seats, dashboards, wheels, tyres and front-end modules. And local content will grow - there is land available to expand the plant, and a stamping shop is planned, which would reduce the need to import body panels from Korea.
Naza is taking a similar approach to building a local presence for PSA Peugeot Citroen. Peugeot 206 hatchbacks are built from CKD kits alongside the Kia models at Gurun, and these are supplied throughout ASEAN. Naza expects to build around 10,000 206s a year, for sale in Malaysia and other markets in Asia, mainly Indonesia and Thailand.
Previously PSA assembled for the region in Indonesia, but has switched to more stable Malaysia, said Dominique Monet, Peugeot's general director for ASEAN countries. The plan is to assemble 307 sedan and 206 sedan models in future as well - 307 sedan kits will come from Dongfeng Peugeot Citroen Automobiles in Wuhan, China. As with the Kia models, the Peugeots sold in Malaysia carry Naza badges, not Peugeot: the 206 is called the Naza 206 Bestari.
The expertise gained from the contract manufacturing operation is now being channelled into turning Naza into a vehicle producer in its own right, with its own range of cars, and sold worldwide. Construction work has commenced on Naza's third factory at a new site at Bertam near Penang - close to the Gurun plant - to build a range of new cars.
The first of these, the Sutera hatchback, has just gone on sale in Malaysia, and will be exported to a number of right-hand drive markets, including the UK, from 2007. Left-hand drive production will follow.
When it is completed in 2008, the US$356m Bertam plant will have a capacity of 100,000 cars - other Hafei-sourced models are also planned. The plant will follow the Gurun model, with local suppliers setting up on-site. Naza has allocated 100 hectares of land for vendors to set up their factories. Until Bertam is ready, the Sutera will be built at Naza's other plant at Pekan.
Again, Naza has taken an innovative, fast-track approach to developing the Sutera. In a groundbreaking deal, it has sourced the basic car from a Chinese manufacturer, Harbin Hafei, which has been making it in China for the past two years as the Hafei Lobo. The car itself was designed by Pininfarina in Italy, and is powered by 1.1-litre, 65bhp Daihatsu-derived engines. Lotus Engineering - a subsidiary of Naza's rival Proton - carried out ride and handling development, to a standard higher than Proton's own rival model, the Savvy.
Naza sources component sets for the Sutera from Hafei. But this is more than a CKD operation. Major components - stampings, engines, transmissions - come from China, but the rest of the car is made in Malaysia.
Indeed, Naza's own R&D centre made major changes while turning the Lobo into the Sutera - the interior is completely new, as are some of the front-end panels. All the exterior lights are different too; the Malaysian version is much more in tune with tastes in developed consumer markets compared to the more basic Chinese version.
This clever deal was brokered by a UK company - IM Group. Best known as the UK's Subaru, Daihatsu and Isuzu distributor, IM Group set up an office in Beijing in 2001 with a view to exploiting whatever business opportunities it could spot. The Naza-Hafei deal is the one of the first major deals brokered by this operation, which is headed by experienced businessman, and former political lobbyist, David Wall.
IM has taken a wider view of China rather than simply looking at potential vehicle import deals into Europe. Wall says the focus has been on making deals. "A lot of people spend all their time in China looking at opportunities. We say let's do the business." IM also helped a number of western organisations set up Chinese operations - including the UK Vehicle Certification Agency and UK-based locks manufacturer Lowe & Fletcher.
Wall and his team take a networking approach - indeed the Naza deal came about almost by chance, when IM's general manager of business development Martin Dalton was introduced to Tan Sri Nasimuddin by another contact from China.
Of course, vehicle import contracts are part of the mix - a by-product of the Naza deal is deal to import the Naza brand to the UK. And the IM Group Beijing office is in talks with a number of Chinese automakers, including Chery and Geely, with a view to exploring opportunities to do business.
--------------------------------------------------
Q&A: Tan Sri SM Nasimuddin SM Amin, founder and chairman of Naza Group
What's your ambition for Naza?
Within three years from now we will launch a model that is 100% our own. We are looking to follow the same direction as Hyundai and Kia. We have learned a lot from Kia and would like to follow their approach. We've learned from what they've done. We are also talking to other manufacturers about other models, and we are still talking to Hafei.
What about the lessons of Proton?
We don't follow Proton - we do our own thing. Proton maybe didn't take car of customer support - but we've learned how to do that from Kia. But competition with Proton is good. If you have no competition, you don't grow.
Would you like Naza to have National car status in Malaysia?
We'd like to be a national car company, but at the same time we'd like to prove to the Malaysian government what we can do for Malaysia. So we're trying to improve our exports. We started as a dealer and have grown in steps - moving up one step at a time.
How big can you become?
At the moment our turnover is about $2 billion US, and we'll build 60,000 cars year. The Sutera will add another 30,000 units next year, so we're growing steadily.
How well has the Sutera been received?
In the first week we have sold between three and four thousand units - it's a very good start. We can export this car and grow our volume. At the moment we are concentrating our exports on Indonesia, Thailand and India - local markets that have similar standards to Malaysia. When we have the volumes there, we will go to Europe.
What about establishing a new brand in Europe?
We've already done that here. When we started with Kia, we were selling 500 units a year. Last year we sold 37,000.
How come Kia lets you put the Naza brand on Kia cars?
There are some tax advantages in using our brand. But the Malaysian market is more inclined to a local brand, and Naza is well known and respected in Malaysia.
What are your plans for the Naza World multi-franchise car sales operation?
We have six in total across Malaysia, selling about 50-60,000 cars a year. And we have a Naza World in Indonesia as well. But we will need this kind of showroom in the future when the local AP import tax is abolished - by 2010 the market will be completely liberalised.
Labels: Naza
posted by SEE FU at 5:33 PM
0 Comments:
Post a Comment
<< Home