Perodua: Growing Market Share Beyond 35 Percent Difficult, MAI’s 1 mil TIV By 2020 Doubtful

As of November 2017, Perodua’s market share in Malaysia stands at 35 percent. The numbers for December 2017 will only be compiled by the third week of January 2018 but we don’t expect any significant movement as far Perodua’s market share is concerned.

At this morning’s interview with BFM radio, Perodua’s President and CEO Datuk Dr. Aminar Rashid Salleh conceded that Perodua’s business in Malaysia is nearing its limit and further gains in market share is going to be difficult.

“If you look at the domestic market, we are about to reach maturity,” said Aminar.

“35 percent, it’s going to be tough going beyond that,” he added.

As of November 2017, Perodua had sold 184,707 vehicles in the eleven-month period of 2017.

No doubt there will be gains from the recently launched all-new Myvi, but net gains will be capped by the small amount of cannibalization of Axia’s sales by the all-new Myvi but Aminar explained that the effect on Axia’s sales are minimal and certainly not to the point of raising any red flags to the company.

A market share of about 35 percent is about the limit any leading domestic brand can realistically hope to achieve in its home market. Toyota for example, has an overall market share of 33 percent in Japan (including ‘kei’ minivehicles). Likewise for Daihatsu in Japan, which holds a 33 percent market share in the ‘kei’ minivehicle segment that it competes in.

In most other markets, leading domestic brands rarely see their market share go beyond 20 percent. Volkswagen hovers at around 20 percent in Germany while Ford and General Motors hover around 15 percent in USA.

As for the Total Industry Volume (TIV), a measure of total new vehicles sold in the country, Datuk Dr. Aminar is doubtful about the government’s projection of selling 1 million new vehicles by 2020.

“Well I am sure when the government came up with those figures, or in this instance MAI (Malaysian Automotive Institute) came up with those figures, it was with certain assumptions at that time. Fast forward, things have changed and I am sure they are going to relook into those numbers. It’s going to be challenging meeting the figure that was mentioned,” he said.

The TIV numbers for 2017 is expected to close at 590,000. The highest TIV ever recorded for Malaysia was in 2015, when 666,674 new vehicles were sold.

Separately, the Malaysian Automotive Association (MAA) forecast’s for 2020’s TIV to be at just 663,500 units, well below the 1 million units originally targeted by MAI when announcing the 2014 National Automotive Policy.

When asked in infrastructure is one of the concerns before Malaysia can realistically aim for a 1 million units TIV, Datuk Dr. Aminar said, “Yes that’s the other factor that needs to be taken into consideration and I suppose that’s one of the reasons why the government is investing in public transportation. There needs to be that balance. You don’t want to have too many cars on the road but at the same time there is demand (for cars). Moving forward we believe there will still be growth, we are talking about three to four percent per year.”

Aminar also elaborated a bit on Perodua’s Transformation 2.0, and how the company is very mindful of new challenges to its business in the form of changing consumer habits and technology disruptors like ride-sharing apps and autonomous vehicles.

He highlighted the recent MoU signing between with Grab. Rather than viewing these new startups as competitors to Perodua’s private car ownership business model, Perodua wants to complement these services.

“If you are to look at the LRTs and MRTs, you still need to get to the station. There is still a need for transportation and we feel that this is where we can come into play – the last mile connectivity. Our cars are compact, easy to drive easy to park. So there are still pockets of opportunities,” he added.

As for exports, Datuk Dr. Aminar also mentioned that Perodua is studying the opportunities in exporting automotive parts, acknowledging that Perodua’s exports of completely built-up cars (CBUs) have been minimal, numbering at no more than 5,000 units per year.

“Apart from CBUs, we are now also talking about exporting parts and components. So that’s the other area which we believe, perhaps the challenges are lesser compared to CBUs. So that’s an area that we are currently looking into seriously,” he said.