Reza: Key To Competitive Auto Parts Price Reliant On Export Volume

Azrul Reza Aziz, CEO of the Malaysia Automotive, Robotics, and IoT Institute (MARii), Malaysian advised automotive companies to enhance their car export volumes to achieve economies of scale. This, according to him, is essential for reducing production costs, which in turn will enable the export of automotive parts and components at competitive prices.

Azrul was responding to reports that Malaysia's supply chain costs are significantly higher than those of China and Thailand, as highlighted by Li Shufu, chairman of Geely Holding Group. Azrul stated that these costs vary greatly depending on a company's cost structure, car model, and supply chain ecosystem. He underlined that various levels of supply chain maturity affect cost effectiveness.

Industry experts, including car manufacturers, researchers, and economists, agree that increasing export volumes is critical for Malaysia to position itself as a regional automotive hub, leveraging ASEAN's over 700 million consumer base.

Despite significant expansion, Malaysia's automobile industry has a long way to go. The country's largest total production volume (TPV) is 775,000 automobiles, compared to China's 30 million and Thailand's 1.8 million.

Azrul emphasised the need of Malaysian businesses using digital breakthroughs and Industry 4.0 technology to overcome obstacles and become carbon neutral by 2050. This includes an emphasis on creating electric car components, self-driving automobiles, and Internet of Things components.

Shamsor Zain, president of the Malaysian Automotive Association, noted that China and Thailand have larger domestic populations, vehicle markets, and service networks. This reduces their reliance on exports and increases their resilience to exchange rate fluctuations.

He stated that, while Malaysia has a sophisticated automotive supply chain, introducing new technology in component manufacture is costly. Positioning Malaysia as an export centre is the best approach to justify these expenditures.

Overall, Malaysia's export capabilities in vehicles and automotive parts must be greatly improved in order to compete in the ASEAN automotive sector.