LOCAL NEWS

The Dep. Minister of International Trade & Industry signing the ‘birth certificate’ of the first Renault Kangoo assembled in Malaysia.

Local assembly of the Renault Kangoo officially commenced today at Tan Chong Motor Assemblers (TCMA) in Segambut, Kuala Lumpur. The event also marks the return of a locally-assembled French model as there is no longer local assembly of Peugeot and Citroen.

Though Tan Chong Euro Cars Sdn Bhd (TCEC), a subsidiary of the Tan Chong Motors Group, began distributorship of Renault models with the Scenic and Grand Scenic, it is the Kangoo which is likely to become the main model because of its pricing which will be from around RM50,000 to RM70,000+ when deliveries begin in January 2005. The company has forecast sales of 2,000 units for the year.

"We can’t confirm the price at this time as there are still some customs matters to finalise. Furthermore, as you are aware, there will be an announcement on the new tariff structure for 2005 and that could also have some implications on our prices," said Teh Kim Hwa, GM (Sales Operations) of TCEC. He said that the variants costing around RM50,000 would be only available for commercial registration as they have panel van and semi-panel van bodies while the passenger variants with manual and automatic transmission would be around RM70,000. Only a 1.4-litre petrol engine will be available for the time being although a diesel engine has not been ruled out in the future.

The assembly of the Kangoo at TCMA is not intended only for the Malaysian market but also other ASEAN countries. Exports are likely to begin during 2006 as Renault Asia-Pacific needs to look into a number of issues which will enable it to export the model regionally and enjoy the benefits of the AFTA agreement.

At this time, Renault is present only in Malaysia and Singapore with a small presence in Indonesia. It is looking at making Malaysia its ‘launchpad’ into ASEAN hence the move to assemble the Kangoo at TCMA. According to Patrick Debrot, Vice-President of Renault Asia-Pacific, the company will utilise the ASEAN Industrial Cooperation scheme (AICO) to facilitate its exports from Malaysia at preferential rates.

AICO provides for companies to enjoy the preferential tariff rates of 0 – 5% import duty but requires the companies to create balanced trade between participating countries. In the case of Renault, which has no other plants in the region, this may have been impossible. However, because it has the Renault-Nissan Alliance, it can work with its Nissan affiliate to establish the exchange of vehicles and/or components to balance trade.

"This is one of the synergies we have with the Renault-Nissan Alliance and we are making full use of it. Nissan is strong in this region so we can get their assistance for such matters, just as Renault is helping Nissan to broaden its penetration in Europe," explained Mr Debrot.

The choice of Malaysian and TCMA to become a Renault production hub for ASEAN was almost a foregone conclusion. Though the Tan Chong Group only acquired the Renault franchise in 2003, it has been one of Nissan’s oldest business partners, having been its distributor for almost half a century. Therefore when it came to finding a trustworthy partner with a proven track record – and one which also had manufacturing facilities – Nissan immediately recommended Tan Chong to Renault.

The TCMA plant is not the oldest assembly plant in Malaysia but many different brands have been assembled there since it began operations in 1978. Besides the mainstay Nissan and Nissan Diesel products, the plant has assembled MAN and Daf trucks, and Peugeot, Audi and Subaru cars. It also provides painting services to DaimlerChrysler for the Mercedes-Benz C-Class. Some years back, TCMA was also appointed by Nissan to become the global source for the Nissan Vanette model as well.

Some clever ways to use the side panels of the Kangoo van variant.	TCMA will assemble the Kangoo only for the Malaysian market in 2005 and also supply to other ASEAN countries from 2006.

While the Kangoo is a fresh new addition to the plant, it is likely that production will be moved to a new factory which is to be built in Rawang, Selangor. The new plant, much larger, will complement the Segambut facility and become more important when Renault begins to move into higher gear with regional supply. Mr Debrot said that for now, Malaysia is the only base which Renault is considering for production in ASEAN.

Building a new plant at Rawang is also a good move for TCMA as development in Kuala Lumpur has seen the Segambut area getting very crowded. When it started operations, the area had mostly factories but today, it has many residential zones as well. Thus TCMA is getting ‘locked in’ and in time, it is also possible that the authorities may think of re-zoning the area.

On the retail side, TCEC plans to make a bigger push in 2005 now that it has the Kangoo. The sales and after-sales network will be expanded and by the end of 2005, there should be at least 50 after-sales locations around the country.

"As you know, the Tan Chong Group made the Datsun brand and then the Nissan brand into a household name among Malaysians and today, we have some 115 outlets nationwide. TCEC, our subsidiary handling Renault, is starting small but from what we have done with Nissan in almost 50 years, you can see that we will also develop the Renault brand and network with an equally strong commitment," Ahmad Abdullah, Vice-Chairman of the Tan Chong Group told MTM.

He added that the company understands how Renault and Nissan have very different images so there will be separation of the brands at showroom level. "We will set up separate facilities so that Renault customers will have the full exposure of the values and approach that our French principal has," he said.

Two of the three bodystyle variants of the Kangoo assembled in Malaysia (front sunroof is not available in locally-assembled model).