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Car Industry in Malaysia

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    Many people are living in different countries, times and circumstances going through developments. Automobile industry, the significant industry of Malaysia in these days, has been allocated to increase the industrialization process to develop Malaysian automobile industry. The Malaysian government started to encourage the foundation of the automobile industry by the recommendation of the Colombo Plan experts in 1964. For developing the industry, the government took some policies; justifying import taxes, applying a tariff system on imports and jointing ventures.

    Stability of Malaysia was possible to huge economic growth, especially in 1970s and 1980s. Growth rate at 8 per cent increased per person income to $4000 after a decade. The economy growth rate shrinks until 7 per cent by the Asian financial crisis in 1998. But a lower exchange rate and the government’s adoption of a recovery plan saw the economy bounce back with strong growth 5. 6 per cent in 1999 and 8. 5 per cent in 2000. Question, The trends in the car industry changed radically from the beginning of the 80s.

    In connection to the above statement, explain the changes in the market condition in the car industry and critically analysed the impacts of these changes to car industry in Malaysia. Your answer should be supported with suitable data, examples and evidences. Factors of the market conditions Technological development and innovation The development in the car industry was started with the National car project; proton (perusahaan automobile national) in 1984. The car project, proton, was a joint-venture project with Mitsubish which a corporation of apan. It started the production Saga in 1985. It has unified manufacturing skills encourage industrial connection and having Malaysian own national brand. The government offered initiative tax and duty rates. Before producing cars in this country, the government concentrated on the replacement equipment manufacturer (REM) about all over the elements. Since proton launched in Malaysia, it developed 186 suppliers and invested around RM 600 Million upper stream activities.

    Before 1997 and 1998 the Malaysian automobile industry has gone through crisis, proton and the seller were setting up 300,000 to 350,000 units of production to attain its economies of scale. For this crisis, proton adopted a policy, technology transfer; the process of skill transferring, knowledge, information, and technique for advancing technology. From 1995, Technology Transfer Agreements recorded Malaysian companies and the technology partner is 98. These include technical assistance, licensing and patent.

    The initial goal of the technological transfer was acquiring the necessary core competence for Malaysian producers. The technology transfers did not lower price. The overhead cost for the component producers were still highly because the carmaker still depend on foreign technology and passing the price of the end user. Proton positioned itself in international market. The achievement of Lotus International Ltd, and Michigan Research Institute adjusted a sight at pulling proton up in the R&D department.

    Proton shared with DRB-HICOM by petronas was also seen as a strategic move by proton. A strategic union petronas and sauber had expectancy to help productivities of proton in manufacturing high quality vehicles. Perodua, in its effort to develop output, formed strategic league with a Japanese company Daihatsu Motor Co. and an Italian company Stola. Perodua’s R&D investment concentrated on developing its capabilities in automotive technologies ranging from testing, design and styling engineering to last manufacturing skills. For this end, Perodua invested actually in labor force raining, computer facilities and equipment, to offer the necessity basic in lower formation for R&D work. Automobile sales in Malaysian (http://www. autoworld. com. my/aw/resources/stats/99sales. asp). For this technological advance, it raised the quantity of the proton wish to produce. According to law of supply, as the price of good increases, suppliers will attempt to maximize profits by increasing quantity of the product sold (http://www. investopedia. com/terms/l/lawofsupply. asp). Caused by technological transfer, proton was priced lower than other competitions.

    In the beginning of the car industry, the carmaker had lack of skills, experiences, limited domestic market and the preferences of consumer for other international brand but after joint-venturing, they are transferred the skills, and experiences of the manufacturing, proton can get the new high technologies from the alliances. So proton was able to produce more goods by itself. So the advance of the technology has been decreased the price of the goods and increased the quantity of goods. Conclusion In the changes of the market conditions, The Malaysian automobile industry has gone through a lot of experiences.

    For this successful story, Malaysian government played efficient roles to develop the industry. With these great processes of the first national automobile project, the manufacture had to broaden its perspective to make the challenges forward. In addition, with the sudden globalization process opens Malaysian automobile industry; it makes Malaysia car industry to survive in the world’s car industry. Boosting its action to meet the forecasted growth in the manufacturing, the industry has to be strong it competitiveness on productivity and market development.

    Reference
    http://www.investopedia.com/terms/l/lawofsupply.asp
    http://www.autoworld.com.my/aw/resources/stats/99sales.asp
    www.proton.com

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