When Mitsubishi Motors Malaysia (MMM) rolled out the locally-assembled Mitsubishi ASX in January 2014, it was mentioned that it would not be the only model assembled in Malaysia and that a second model would be forthcoming. Today, that second model left the line at the Tan Chong Motor Assemblers (TCMA) complex in Segambut, Kuala Lumpur, and it is the Outlander 2.0, the bigger 7-seater SUV.
With two models assembled locally, MMM is now in a position to grow its sales volume as it can price the models more attractively due to getting incentives from the government which help to offset production costs. As any carmaker doing business in Malaysia knows, without local assembly, growth will be slow and limited and although MMM has sold over 100,000 vehicles since it was established in 2005, it could probably have achieved a bigger number if local assembly had started earlier.
In fact, the intention to assemble locally was in a strategic plan as far back as 2011. The plan referred to as the ‘ASEAN CHALLENGE 12’ aimed to gain a 12% market share in ASEAN’s five major markets. Mitsubishi Motors Corporation (MMC) was keen and comfortable making investments in the region which it saw as being more stable than other emerging markets. Japanese brands had been present since the 1960s and were among the top sellers in the region.
Where Malaysia was concerned, MMC’s presence had been strong before it decided to become Proton’s partner in 1985. Mitsubishi was among the top brands sold in Malaysia and this was also partly due to its local distributor (Cycle & Carriage Malaysia) assembling a number of models at a plant in Johor. Older readers will remember models such as the Lancer, Galant, and Tredia which sold in large numbers in the 1970s and early 1980s. But then MMC chose to stop selling passenger cars below 1600 cc after it became Proton’s partner, as a demonstration of its commitment to helping make the National Car project a success by not selling competing products.
However, it continued to sell the 2-litre Galant for a while and also the Pajero and light commercial vehicles like the L200 and Delica, which were not in direct competition with Proton. The Pajero, which was among the first modern SUVs (along with the Isuzu Trooper) enjoyed strong sales in the 1980s and 1990s under USF and later on, the L200 was also very popular when pick-ups could be registered for private use. The models were assembled at the manufacturing complex in Pekan, Pahang, which is today owned by DRB-HICOM.
Proton’s partnership with MMC ended in the early 2000s as the national carmaker felt it knew everything that needed to be known about making cars, and it was ready to take on the world on its own. It even had its own engine, the CAMPRO, and told MMC it didn’t need to source engines from the Japanese carmaker any longer.
However, Proton was still willing to be associated with MMC, but on a more equal basis rather than as a ‘teacher-student’. There were plans to clone a large Mitsubishi model as a replacement for the aging Perdana which had been based on the 1994 Mitsubishi Eterna. That never materialised but MMC was keen to work with Proton and offered it the Lancer to use as the basis of the Inspira. This naturally impacted Lancer sales for MMM but it was a deal that the factory had done with Proton.
In ASEAN CHALLENGE 12 plan, MMC wanted to utilise Proton’s production facilities to assemble its cars. This was to have taken place in 2012/2013 and all the groundwork was done to assemble the ASX. But Proton did not seem to want to finalise the deal and after a long and frustrating wait, Osamu Masuko, President of MMC, decided that they could not wait any longer and gave MMM the go-ahead to find another assembler to do the ASX.
This probably delayed the launch of the first locally-assembled Mitsubishi model in some 30 years. Eventually, TCMA was selected and was certainly a good choice with its long history of assembling various vehicles (not just Datsun and Nissan). By then, the ASEAN CHALLENGE 12 had been replaced by the ‘New Stage 2016’ business strategy which included local assembly of the ASX in Malaysia as part of the effort to establish an SUV brand in emerging markets, and also reinforcing MMC’s production in ASEAN countries.
Malaysia was the right country to assemble its SUV models because, among the ASEAN markets, it has the largest proportion of SUV sales as part of the total sales. In retrospect, MMC’s strategic move was timely when it can be seen how the popularity of SUVs continues to grow and more models are being introduced. With a locally-assembled model priced attractively – and now a second one – MMM is in a better position to capture a bigger share of the market. So far, it has relied on the Triton (imported from Thailand) for the bulk of its sales but now it should see SUV sales climbing.
For the Tan Chong Group, taking on the assembly of Mitsubishi vehicles helps to better utilise its capacity at the Segambut plant. Incidentally, we understand that the business is actually handled by Warisan TC Automotive Manufacturing (M) Sdn Bhd (WTCAM), which is an affiliate in the Tan Chong Group. At this time, WTCAM is using part of the TCMA complex for its assembly activities. TCMA also assembles Subaru vehicles which are sold in Malaysia as well as exported. For now, there seems to be no plan to export the ASX or Outlander from Malaysia.
As to whether more models will follow; the ‘New Stage 2016’ business strategy was to run until the end of the company’s fiscal 2016 year so there is probably a new strategy being planned which will see additional models assembled in Malaysia. One possibility would be the Outlander PHEV (Plug-in Hybrid Electric Vehicle) which is selling in some countries. Now that hybrids are accepted by Malaysians and some companies are already assembling them locally, MMC could also consider joining in and it can get rewarded by the government for doing so too.