As markets grow in size, they become more significant to carmakers who see it worthwhile to become directly involved in the distribution and marketing activities. This has been the trend in Malaysia since the late 1990s as manufacturers have established subsidiaries to handle distribution and in many cases, marketing as well. Most of these subsidiaries include, as minority shareholders, their former local business partners who had represented them earlier and helped them build up the market for the brand.
The latest manufacturer to take on a direct involvement in the Malaysian market is Suzuki Motor which has concluded an agreement with its partner, DRB-Hicom, to acquire a substantial stake in Suzuki Malaysia Automobiles (SMA); together with its trading partner, Itochu, the two Japanese companies will hold 60% share in SMA while DRB-Hicom will hold 40%. It is unlikely that Suzuki will have management control of the company, though.
With this latest move by Suzuki, SMA should see more development especially in the area of product offerings and perhaps even take on a regional role. Furthermore, being a subsidiary, SMA would be involved in product development and planning at a much earlier stage and can get more attention given to the Malaysian market, which is good news for consumers.
SMA started off quite well in May 2005 with its Swift being a hot-seller. Unfortunately, unusual circumstances in the market (including the AP controversy that affected much of the industry) dampened its sales and it lost momentum. In March 2006, SMA entered into a 5-year License Agreement with Suzuki wherein Suzuki granted a non-exclusive license to SMA to assemble the Swift locally (at the AMM plant in Pekan, Pahang). As a result of this move, the sales volume of the Swift rose to 2,154 units in 2007, a 34% increase over the 2006 volume.
In a statement to Bursa Malaysia, DRB-Hicom said that the development is in line with the group?s overall strategy of maintaining its key position in the Malaysian automotive industry. It added that the joint-venture ?displays Suzuki?s strong commitment to strengthen its relationship with DRB-HICOM in the marketing, distribution and assembly of Suzuki vehicles in Malaysia and to widen its product range and models in Malaysia?.