Honda to double Malaysian sales, expand regionally with new plant
Honda to double Malaysian sales, expand regionally with new plant
Eileen Ng, Agence France-Presse, Pegoh, Malaysia
Prime Minister Mahathir Mohamad on Friday launched a 170 million-ringgit (US$45 million) manufacturing plant by Japanese carmaker Honda, which aims to double sales in Malaysia this year and expand its regional presence.
The plant in Malaysia's southern Malacca state is Honda's third in the Association of Southeast Asian nations (ASEAN) after Thailand and the Philippines, and its 20th in the world.
Honda Motor Co. Ltd. senior managing director Katsuro Suzuki said the company opened a new plant in Taiwan earlier this month and would launch another factory in Indonesia in March as well as raise production in Thailand.
The regional expansion was part of Honda's strategy to boost efficiency and tap benefits of the ASEAN Free Trade Area (AFTA), he said at the launching ceremony.
"We are well on the way to putting in place the region's most competitive and most comprehensive automobile production network. This new factory in Malaysia will act as an important focal point for Honda in ASEAN," he said.
Honda Malaysia aims to double sales to 12,000 units this year, said its chairman Mohamad Saleh Sulong.
He said the 80-acre plant, which has an initial capacity of 20,000 units, would cater to domestic demand before catering to the export market in 2005.
The 80-acre plant also houses Honda's first facility in Asia to produce critical drive-shaft components for export markets.
Suzuki said Honda hoped to also produce other advanced components such as electronic parts in Malaysia and would encourage Japanese parts manufacturers to invest in Malaysia to increase local content for its cars.
He said Honda hoped to integrate the Malaysian operations into its ASEAN production network by producing an exclusive model in Malaysia for exports and appealed for government's support.
A Honda source told AFP that production of the popular CRV four-wheel-drive model would soon be focused in the new Indonesian plant, and that of the Accord model in Thailand.
But Malaysia has been left out of the picture due to its two- year delay in cutting import tariffs for cars and components under AFTA, the source said.
Malaysia has negotiated an extension and said it would cut tariffs of between 42 to 300 percent from this year to 20 percent by Jan. 1, 2005 and down to 5 percent by 2008.
Analysts said Malaysia was losing out to Thailand, which has emerged as a regional manufacturing base due to its lower costs and liberal investment rules.
Mahathir acknowledged Thursday that the delay could setback Malaysia's auto industry.
"We would lose out in some sense but we will also gain in terms of protecting our own national car (industry), which none of the other countries have," he told reporters.
The premier, who mooted the national car industry in the early 1980s, said Malaysian carmakers were still not cost effective due to low production volume and high investment in research and development.
"We will reach a level of competency by the year 2005 when we can compete with them," he said.
Mahathir, who is also finance minister, reiterated that car prices would not come down under AFTA as the government would raise excise duties on both foreign and local cars to offset loss of revenue in tariff cuts.
"We have time until 2005. I don't know why people think that in January 2003, prices of cars will come down," he said.
Carmakers have urged the government to reveal details of the new excise duties to clear the air over future pricing structure as expectations of cheaper cars drove sales down last month by nearly 10 percent.
Honda has pledged to invest a total 374 million ringgit in its Malaysian manufacturing operations by 2005.
Honda Motor of Japan owns 51 percent of Honda Malaysia, while local firm DRB-HICOM Bhd. and Oriental Holdings hold 34 percent and 15 percent respectively.