With Malaysia conquered, 2023 to be year of Perodua's export recovery - 95 percent local content remain

Now that 2 out of every 5 new cars sold in Malaysia is a Perodua, and the number is set to rise to nearly 1 in every 2 by the end of 2023, Perodua is reaching close to the peak of what more it can do to expand its business locally.

Perodua ended 2022 with 282,019 units sold, and is targeting an 11.3 percent increase in sales for 2023, reaching 314,000 units, with a 44.5 percent market share, up 5.4 percent from 2022.

To seek new avenues of growth, Perodua will have to go beyond our national borders. Perodua is already exporting the Perodua Myvi to Indonesia under the Daihatsu Sirion badge, but as an imported model, sales is limited by Indonesia’s import quotas.

The reality is that the ASEAN trade bloc isn’t really a trade bloc like the EU or NAFTA, but merely a loose alliance of member countries, each with their own set of protectionist policies that employ complex indirect, non-tariff trade barriers to protect their own domestic industries.

Short of setting up a new plant in the local market, sales volume for any imported car, regardless of whether it’s originating from an ASEAN member country or not, will usually be capped to a very low level.

It’s a similar challenge with Thailand. Any car that isn’t produced in the Kingdom to comply with their local Eco Car requirements, or is not a pick-up truck-based vehicle, will be heavily taxed.

Actually, Perodua can easily mitigate these challenges by buying more parts produced from Thailand or Indonesia, but this will go against Perodua’s self-imposed principle of supporting and growing Malaysian vendors by insisting on exporting cars with a 95 percent Malaysia-sourced/assembled parts content ratio.

This, along with strong demand from Malaysia and shortage in supply of new cars mean that Perodua’s export sales have dropped by nearly than 75 percent from its peak in 2016 (with 4,636 cars exported) to just 1,137 cars in 2022.

Faced with such challenges both externally and internally, Perodua’s export plans is focused on countries with no domestic manufacturing industries to protect, like Singapore, Fiji, Sri Lanka, Mauritius, and Seychelles – Perodua’s current main export markets.

Starting 2023 however, Perodua hopes to revive its export business. Speaking at the media on Tuesday on Perodua’s outlook for 2023, President and CEO Dato’ Sri Zainal Abidin Ahmad said by 2025, Perodua hopes to increase its export numbers to over 5,000 units.

The CEO also recognized the challenge of Perodua’s lower perceived brand value. “While we are accepted here, our brand value in other countries is also quite low. We are also not there yet in terms of cost and quality competitiveness, we know that.”

However, we need to point out that Perodua is already exporting the Myvi under the Daihatsu badge and is supplying two models to UMW Toyota Motor – the Toyota Rush and Toyota Veloz. Development of the Perodua Bezza and Perodua Myvi are done locally by Perodua, with no Daihatsu equivalent model. As a regional R&D hub for the Toyota-Daihatsu’s Emerging Market Car Company, Perodua also developed the upcoming D92A 2023 Toyota Vios.

Also read: Can you spot the Perodua parts in this D92A 2023 Toyota Vios?

So to say that Perodua’s cost and quality competitiveness is ‘not there yet’ is just downplaying the fact that Perodua is already meeting Daihatsu’s and Toyota’s requirements, but that’s just how Perodua leaders are and is a reflection of their continuous improvement mindset.

Also read: EQ is more important than IQ - Perodua explains why it doesn't measure success by numerical KPIs

The CEO also added, “There are also barriers to entry that we must study, such as regulations and standards. Getting the right partners is also a challenge, especially one that can strategic feedback about their market. Noting these challenges is basically half the battle. Our plan is to overcome these challenges, for example with continuous improvement in cost efficiency including at our vendors, quality and cost improvements to improve competitive level on a global level, strengthening our export organization, compliance to potential export countries’ standards and regulations, develop and grow existing distributors business, continue to increase our brand awareness and presence.

“Export is something that we are still behind. Hopefully in the next 3 years we can recover and we will be able to export more than 5,000 units by 2025, but I put in the slide by 2025, about 8,400 units to be exported. We will still continue to study, particular in market access.”

When asked about the difference, that’s because Perodua is still in the midst of finalizing export plans for yet another export destination, and if it is successful in overcoming several market access barriers, Perodua could easily do another 3,000 cars there. Hence the 8,000 plus figures in the slide, but a committed target of just over 5,000 units.

Perodua also explained that it is rather agnostic on the badges of its exported models. It might wear either a Perodua or a Daihatsu badge.

On the same day, Proton’s Deputy CEO Roslan Abdullah also revealed Proton’s interim export goal is to reach 10,000 cars (no specific timeframe given), which is double its 2022 performance of 5,406 cars export, nearly half of it to Pakistan.

Also read: Proton is now No.6 in ASEAN, reiterates Top-3 marque in region by 2027 goal