For Bermaz, earning customers' trust is core to staying relevant in this ESG-compliant EV era
Hans · Oct 23, 2022 12:00 PM
The narrative of battery electric vehicles (BEVs or battery EVs) wasn’t always dominated by Tesla. When the Tesla Roadster was just a toy driven by billionaires for short trips within Monaco, the Mitsubishi i-MiEV and Nissan Leaf was already being used by many families and companies in Japan, USA and Europe. So why the difference in their successes (or failures)?
One key reason was that Tesla branded itself as a tech startup rather than an automaker, and Tesla worked the capital market in ways legacy automakers never did.
By the mid-2010s, the financial world was undergoing a shift towards ESG-compliant funds / stocks. Short for Environment, Social, and Governance, ESG rating is now seen by many fund managers to be just as crucial as a company’s P/E ratio.
So tobacco and weapons are out, renewable energy and EVs are in. Soon, hot money is flowing in the direction of EV startups. Ironically, Elon Musk’s erratic behaviour is harming Tesla’s ESG scores. In response, Musk is calling ESG a scam, but that’s another story.
The takeaway here is that ESG is more than just about buying EVs as company cars or installing solar panels and rainwater harvesting systems, because any company can do that and claim to be green.
We recently sat down with Bermaz Auto’s Executive Chairman Dato’ Sri Ben Yeoh to understand the state of ESG compliance among local car companies. Despite being just slightly more than 10 years old, Bermaz’s ESG is ranked in the top 25 percent in FTSE Bursa Malaysia EMAS Index by FTSE Russell, a subsidiary of the London Stock Exchange Group.
The Bermaz Auto group consists of Bermaz Motor (Mazda in Malaysia and Philippines), Bermaz Auto Alliance (Peugeot), and Dinamikjaya Motors (Kia). The company also owns one third of Inokom Corporation, operator of the Kulim plant that does contract manufacturing for BMW, MINI, Porsche, Mazda, Kia, and several other Chinese commercial vehicles.
Yeoh explained that Bermaz’s reason of existence is to be an automotive & mobility distributor of choice, and it wants to do this with the simplest way – delighting its customers better. The company’s measured progress in turning around the difficult Peugeot and Kia brands is proof of it. There’s a long queue for its quarter of a million Ringgit Kia Carnival and the Peugeot 2008 is an increasingly familiar sight in major cities.
Meanwhile, the RM 306k Kia EV6 is pulling customers away from BMW and Mercedes-Benz, and Bermaz has more customers than it has cars to deliver.
Products will keep evolving, customer care is the foundation of sustainability
The way the company sees it, whether cars remain as combustion engine vehicles or EVs is moot, because products will always change, while customers are the only constant.
For Bermaz, Sustainability must be based on having a strong foundation that leads to good customer service, so the business can survive difficult challenges.
Although EVs and renewable energy tend to be the focus of ESG, Bermaz sees its commitments to ESG to include how it treats its business partners, customers, in staying relevant to society – the other S in Sustainability.
The public doesn’t care (and they don’t need to) about whether the showroom building has solar panels or rainwater harvesting – which Bermaz has done at its headquarters and Kulim plant anyway - but they care about the service they are getting.
One example of Bermaz’s sustainability enhancing measure is the BAuto Training School, which pays between RM 600 to RM 1,000 per month to 80 SPM school leavers every year while they undergo a 2- to 3-year training, culminating in an internationally recognized IMI Diploma (Institute of Motor Industry, UK) that also includes EV competency. The certification is also recognized by Malaysia's Jabatan Pembangunan Kemahiran (JPK).
The graduates get a 4-year guaranteed work placement with Bermaz.
No sustainability without investments to grow local talent pool
By upskilling Malaysian youths and ensuring a steady supply of technical talent to service Bermaz’s customers’ cars, the company has sidestepped the shortage in technicians and Body & Paint experts - a serious issue in Malaysia because our education system is producing too many unemployable graduates but too few skilled workers for blue collar jobs.
The Bermaz Auto Training School is also one of the few technical schools in Malaysia that is equipped to train youths to diagnose and repair EVs.
Bermaz is also the only car company in Malaysia with nine IMI Level 4 (EV competency) certified trainers. The Malaysian technicians at Bermaz’s EV centre in Glenmarie are also capable of carrying out module-level battery repairs for Kia, Peugeot, and Mazda, which translates into less waste and lower ownership cost (other manufacturers require customers to change the entire battery pack).
So once again, ESG is not just about ICE or EV, but whether the company has the local talent to sustain its business, takes care of its customers to stay relevant even as EV products enter the market.
Sustainability is about staying relevant to society
“Ten years ago, our whole objective was to survive, to be relevant. That means as a business entity we were very focused on expanding our presence and improve returns to our stakeholders. Today we are a big company, we are now responsible, in the sense that we believe we can contribute and lead in sustainability, to be able to lead the automotive industry to be more cautious of environmental and social issues. As a listed entity, we should be totally compliant,” said Yeoh.
Fun fact: Every Kia EV6 customer is given a personal liaison for them to contact, think of it as a car version of a hotel’s concierge service or a premier banking service’s relationship manager, so EV6 owners don’t need to call any 1-800 number for assistance. Not even customers of German luxury brands enjoy such privileges.
Customers of all EVs sold by Bermaz will also have a dedicated, EV-trained roadside assistance service to contact. The tow trucks that assist Bermaz’s EV customers are equipped with safety equipment to protect against high voltage. This is on top of the extensive First Responders training given by the BAuto Training School to equip the fire department, civil defence, and police with the skills to handle serious accidents involving EVs.
When asked if Bermaz sees itself as a leader among local automotive players, the typically humble Yeoh said, “I won’t say we are the leader, but I will say we will strive to be relevant, to contribute to society.”
Yeoh is especially proud of the Mazda Medicare Fund (MMF), which is contributed by Mazda owners, business associates, and staff at the annual Mazda Charity Golf Tournament. The fund is managed by Bermaz but collects zero administrative charges. Since its inception in 2015, the fund has contributed RM 3.6 million of dialysis treatment for 267 patients, plus other charitable acts.
Adopting circular economy at a local level
Many manufacturers are talking about circular economy but on the local level, few EV importers, despite their products’ green image, have any measures in place to handle waste battery disposal. Most of the time, these hazardous waste materials are simply passed on to a contractor to handle.
Did you know that EV batteries have a limited shelf life, require air-conditioned / controlled temperature storage, and some brands impose restrictions against stacking? The logistics of moving and storing batteries is quite complicated and Bermaz is one of the few EV distributor that has put in place processes to store replacement EV batteries, as well as their collection and recycling.
Typically, waste batteries are sent back to Korea, Japan or Europe but to Bermaz, this doesn’t make sense as the additional transport contributes to more CO2 emission. The company is now in talks with two potential local companies to do battery recycling.
There are many predictions about how this EV-driven, once-in-a-century disruption in the automotive industry will pan out in the next decade, but the fact is that everyone is just role playing a fortune teller, albeit one that uses Excel and PowerPoint instead of divination sticks.
None of the predictions about EVs – be it market share, reduced cost of batteries, lower average selling price, including Musk’s infamous “coming next year” promise for a true self-driving car, a promise which he has been repeating for since 2014, have come true.
Amidst the uncertainty about how fast and how soon this EV revolution will grow beyond being a rich man’s toy, Bermaz sees its laser-like focus on customer service as the foundation that will allow it to pivot its 3 brands – Mazda, Kia, Peugeot – into whichever end of the electrification scale.
This high level of agility, wide portfolio of green products, circular economy-based supply chain and processes that extends to its vendors, is also probably why Bermaz Auto is included into the FTSE4Good Bursa Malaysia Index while another automotive GLC was dropped.
The next stage of Bermaz's electrification push will be the Peugeot e-2008. While the Kia EV6 is the sexy poster car, Bermaz believes that EVs will not contribute anything in solving climate issues unless more affordable models are introduced.