10 new models still to be launched in Malaysia! Oct. to be 2020’s most intense month for new car launches, why?

With at least five models confirmed to be launched in October, and another five more that are also very likely to join the growing list, October is definitely the busiest month of this year.

That’s a nice problem to have considering the slump that the industry is in. Cumulative new vehicle sales in Malaysia for the first half of 2020 was down by over 40 percent compared to the same six-month period last year.

The all-new 2020 Honda City, Nissan Almera, Proton X50, Hyundai Kona and Mitsubishi Xpander will certainly be launched in October. That means on average, there will be at least one new model to be launched every week next month.

We can also expect soft launches/preview of the all-new 2020 Hyundai Sonata, while BMW Malaysia is expected to launch the plug-in hybrid variant of the G20 generation 3 Series (330e) as well as the 2 Series Gran Coupe (rival to the Mercedes-Benz CLA-Class) within the October-November period.

Not forgetting the Volkswagen Passat R-Line and Kia Seltos, both are now available for viewing but prices have yet to be approved by the government. Hopefully this will be sorted out in the coming weeks.

In total, there are 10 new models mentioned above, excluding the individual variants!

Marketers will tell you that this is not a good idea. In fact, it’s a very bad arrangement. When you launch a new product too close to another big developing news, you will have to spend more money to get consumers’ attention, at risk of sending the market down into a shouting match.

Perodua for example, have no intention of joining the shouting match, preferring to launch its yet-to-be named D55L sub-compact SUV that’s supposed to be a cheaper alternative to the Proton X50 early next year.

Officially, Perodua says this was their plan all along.

Sources familiar with the matter have told WapCar.my that pre-production of the D55L will begin this month, with series production to follow in December 2020, building up to a market launch anticipated for January 2021.

So why the rush to launch in October?

Well, car companies are stuck between a rock and a hard place. Damned if they launch, damned if they don’t.

Remember that business activities in the first half of this year were curtailed by the MCO. Before one can launch a new model, there are many behind the scenes paperwork to be completed - many of which could not be done earlier.

The most important being Vehicle Type Approval (VTA), basically homologating the car to meet our local regulations, which is aligned to the standards set by the United Nations Economic Commission for Europe (UNECE).

VTA is to be approved by JPJ and the MCO period earlier this year meant that a lot of VTA applications couldn’t be completed in time.

For locally-assembled models, there’s a lot of localization and parts sourcing work that needs to be done, as well as setting up the jigs and equipment at the plant. These are all very physical work, involving multiple parties, and can’t be completed over a Zoom call.

In the case of the Proton X50, it’s even more complicated because this is the first time the Geely Binyue donor car has been converted into right-hand drive, and as we have detailed in an earlier post, the job is far more complicated than merely inverting the dashboard and shifting the pedals and steering rack to the right side.

This is why after MCO was lifted, there was a surge in spyshots of camouflaged Proton X50 prototypes. Development work and on-road evaluations that should’ve been done earlier had to be pushed back and working timelines compressed.

Then there’s also the necessary soft skills training. Sales advisors need to be briefed and trained on the products, and before that can be done, the product trainers themselves (train the Trainer sessions) need to be trained too.

Once again, product trainings can’t be completed over a Zoom call. Social distancing requirements also means that product trainings now take longer to complete.

The other reason has to do with the cyclical nature of car sales. Like every business, car companies have to keep to their annual sales targets. With the first half of the year written off, there’s immense pressure to catch up and close the gap in sales.

The government’s sales tax exemption for locally-assembled passenger cars (pick-up trucks and commercial vans are not entitled) has been a great sales booster but it expires by 31-December 2020.

Realistically speaking however, the window period to close the gap in sales will end by November. The last month of the year is usually reserved for fulfilling sales orders and delivering vehicles to customers. Remember that dealers typically take about two weeks to complete the negotiations with customers, sort out hire purchase documentations, trade-ins, and delivering the vehicle.

Therefore, car companies have little choice but to ensure that they get their new models out to their sales network’s showrooms by October.   

In the case of the Honda City and Nissan Almera, it’s also influenced by the change in Eco Car regulations imposed by Thailand.

So powerful and influential is Thailand’s automotive industry that changes in their auto policies will have spillover effects to the rest of the region.

When Thailand tightened exhaust emissions regulations for pick-up trucks in 2016 and introduced a new CO2-based excise tax system, it raised prices of pick-up trucks. Lower emissions engines are more sophisticated and cost more to produce and this partly explains why pick-up trucks sold in Malaysia are no longer as cheap as they used to be.

The most recent change in Thailand’s automotive policy has to do with the so-called Eco Car Phase II policy, a segment of tax-deducted low exhaust emissions (must meet Euro 5 standard) and low fuel consumption (not exceeding 4.3-litre/100 km) entry level cars.

Previously defined by A-segment cars like the Honda Brio and Brio Amaze as well as the Mitsubishi Mirage and Attrage, today’s Eco Car models are defined by the new generation Honda City, Nissan Almera and Toyota Yaris Ativ (Vios to you and I, but with a smaller 1.2L engine).

The policy states that in order to qualify for the tax breaks, car companies must begin manufacturing the new models by 2019. It was a tall order and many car companies balked at the tough requirements, but grudgingly complied anyway.

This is why both the all-new 2020 Honda City and 2020 Nissan Almera only made its global debut November 2019. Production began shortly after (barely meeting the deadline) and the models only hit the Thai showrooms in early 2020.

Although the Malaysian market Honda City and Nissan Almera are locally-assembled (CKD), the assembly kits come from Thailand.

Eco Car Phase II’s targets are also tied to automotive parts manufacturing and exports, which also means that associate companies in neighbouring countries, Malaysia included, will be obligated to import these parts from Thailand as soon as possible. 

As the Honda City and Nissan Almera were launched in Thailand very close to each other, so too will Malaysia, which is what’s happening now.

As for the Toyota Yaris Ativ (our Vios), it had just received a facelift in Thailand in August, about seven months after the City and Almera’s market launch. Applying the same timeline locally, we can also expect the updated Toyota Vios to launch here next year.

2020 is an intense year indeed and for those with the means, is a good time to buy a car. Remember that prices are set to increase after 31-December 2020, not just due to resumption of the standard 5 percent sales tax, but also due to revised Open Market Value (OMV) calculation.

In January, WapCar.my first broke the news that the (then) government has revised the methods used for OMV calculation, which will result in an increase in car prices.

The Malaysia Automotive Association (MAA) later confirmed this but following fierce backlash from the public, the government delayed its implementation to after 31-December 2020.

Since then, we have had a change in government and a new Minister of Finance but the current PN government is still mum on the matter despite prodding by the MAA. With no new directive, the status quo remains and the new OMV calculation should be implemented as planned.