C&C Bintang’s announcement states that efforts are underway in conjunction with Automobiles Peugeot to find a buyer to take over the inventory, assets and staff employed in the business ‘to ensure a smooth transition and the continuation of the Peugeot franchise in the Malaysian market’.

The company also revealed that its Peugeot business - via the C&C Automobiles subsidiary -  had been doing badly, incurring net losses of RM0.25 million and RM1.77 million in 2006 and for the six months ended 30 June 2007, respectively. By giving up the Peugeot franchise, it is expected that ‘funds released from the discontinuation of the business will be used to optimize the Group’s working capital’.

C&C Bintang was the fourth company to take on the franchise and apart from one insignificant company that held the franchise for a couple of years in the late 1980s, the other two had actually been franchise holders for considerable lengths of time. Prior to C&C Bintang, it was the MBf Group (through MBf-Peugeot) that held the brand and they certainly did some great things with it. The late Tan Sri Loy Hean Hong had taken on the franchise as the country was coming out of the economic recession of the mid-1980s and he saw that people were able to afford more expensive cars. He himself had high regard for the French cars as he had serviced them in his younger days and knew they were durable. In having cars to sell, he also found that it benefited MBf’s other units that sold insurance and offered financing. The 405 was very popular and kept Peugeot among the top-selling European makes in the first half of the 1990s but when the economic crisis stormed in, the MBf Group was severely affected and had to give up the Peugeot franchise to survive.

Before MBf Peugeot, Asia Motor had been handling Peugeot but family issues led to the end of the Asia Motor business in the mid-1980s. Asia Motor had actually put in a strong effort with the Peugeot brand (as well as the Mazda brand) and was able to get the French company as well as the Japanese company to share in the investment for an assembly plant in Petaling Jaya, Selangor, in the 1970s. The plant, called Asia Automobile Industries, was later sold to C&C Bintang which then used it to assemble Mercedes-Benz commercial vehicles and in later years, did final assembly of some passenger cars. It is no longer in existence as the area (behind the C&C Bintang complex alongside the Federal Highway) has been redeveloped.

Asia Motor took the Peugeot brand to higher levels in the 1970s

Prior to C&C Bintang’s announcement, Peugeot had been reported in a local daily as having plans to tie up with another party to assemble its cars locally. However, this may be a misunderstanding by the reporter as a reliable source told MTM that the French carmaker does not have any CKD plan. Peugeot did once have a CKD plan for Asean in the late 1990s when it was considering assembling the Peugeot Partner light commercial vehicle in Indonesia. However, the severity of the economic crisis probably discouraged the French from executing the plan.

The problem with Peugeot has been that they still view Asean as a region that is not significant enough. On several occasions in the past when this writer asked about how Peugeot planned to exploit AFTA, the response would be ‘wait-and-see’ – and that was as far back as 10 years ago!

It is possible that since they have a relationship with the Naza Group, having provided the 206 for ‘cloning’ into a Naza Bestari, that would be their first choice of a new partner. Certainly, Naza would be a ‘choice’ partner as they have easy access to APs and a nationwide network, not to mention a couple of plants.

At one time, the Sime Darby Group was also looking at acquiring the Peugeot franchise and did some preliminary studies. But given the reorganisation of the whole group in recent times and probably new strategies to synergise their various units handling different brands, they probably have more than enough for now.

Another possibility might also be the Oriental Group which lost the Honda automobile franchise after 33 years and then took on the Hyundai CKD franchise. They would certainly be keen on taking on another brand since their plant could do with more volume than just assembling Hyundais. The plant in Johor has also had experience assembling the Peugeot 405 before though that was some 10 years back.

Having established a relationship with Naza when it provided the 206 for cloning into the Bestari, Naza may be a strong choice for a new franchise holder

Peugeot’s immediate concern should be the existing owners who will need after-sales support. The impending news that C&C Bintang will cease to handle the brand would already be worrying for owners and if Peugeot does not take active steps to look after their needs, the brand will certainly be damaged. If no new party is found to take over the franchise, then Peugeot may have to do what Citroen did which is to appoint a company to provide after-sales support in the interim (Citroen appointed Brooklands Motors after Directional Malaysia ceased to be is distributor).

In this case, Naza may be the best bet since its workshops already handle the 206-based Bestari and therefore have some knowledge of Peugeot products and some contact with the French. Naza has a big service network which can easily handle Peugeots as well.