Geely: Malaysia’s Supply Chain Cost 30% Higher & Foundation Is Weak!

During a recent interview on CCTV's "Dialogue," Li Shufu, chairman of Geely Holding Group, discussed the problems and prospects in Malaysia's automotive industry. Said dialogue also coincided with an event commemorating the 50th anniversary of China-Malaysia diplomatic relations.

He emphasised that Malaysia's automotive supply chain costs are approximately 30% more than in China and more than 10% higher than in Thailand. The exec highlighted this stemmed from a lack of local competitiveness and reliance on imported parts.

Geely, which acquired 49.9% interest in Malaysian automaker Proton back in 2017, intends to boost the company's supply chain competitiveness. Unlike other Chinese companies such as BYD, Great Wall, and Chery, which largely export and construct vehicles in Malaysia, Geely has fully integrated by investing in management, technology, and goods.

This strategy has proven successful, with Proton's Geely-based models such as the X50, X70, X90, and S70 accounting for more than 40% of sales at some dealerships. Said models also considerably contributed to the company's 154,497 units sold in 2023.

Meanwhile, published records show that among Chinese brands entering Malaysia in 2023, Chery had the largest annual sales of 4,493 units, followed by BYD with 3,728 units.

Furthermore, Geely's strategy extends beyond Malaysia, with the goal of using Proton as a platform to enter the ASEAN market and beyond, particularly in the right-hand drive (RHD) market segment. Geely partner and Proton's parent firm, DRB-HICOM Group, inked a framework agreement in April 2023 to establish the Tanjong Malim Automotive Hi-Tech Valley (AHTV).

This initiative, which includes production, education, research, and urban development, intends to increase annual vehicle production to 500,000 by 2035, with half set aside for export, and to establish a strong local parts supply chain. Simultaneously, it will establish a 1 million-part supply chain system in order to become the ASEAN automotive industry centre.

Wei Mei, CEO of Geely International Holdings (Malaysia), also told the media that Malaysia's industrial manufacturing foundation is weak. This prompted Geely to invest US$10 billion in the AHTV mentioned in order to replicate the automobile manufacturing ecosystem in China in Malaysia, with the hope that Malaysia will become a strategic highland for Geely to expand globally.