Could EVs Be Lifeline For Tan Chong Motor?

Tan Chong Motor Holdings Bhd is betting on electric vehicles (EVs) to pull the company back onto stable ground, and Hong Leong Investment Bank (HLIB) believes the upcoming TQ Wuling Bingo could play an important role in that plan.

Tan Chong has already started taking bookings for the Bingo, which will be assembled at its Segambut plant. It’s a clear move to finally get a foothold in Malaysia’s fast-moving EV market - an area the group has largely sat out of while competitors surged ahead.

HLIB also pointed to Tan Chong’s new painting services contract for Perodua’s first EV, the QV-E as another bright spot. Management says both programmes require only minimal capital spending, which is crucial for a group that needs to rebuild without overextending itself. 

Tan Chong is also prepared to let go of non-core assets as part of its restructuring.

Even so, the challenges are real. Tan Chong’s Malaysia sales dropped 17.9% year-on-year to 5,433 units in the first nine months of the year, dragged down by stiff competition and a lack of fresh, compelling Nissan models. Lower sales volumes continue to hurt margins as well.

Because of this, HLIB is keeping its “Sell” call on the stock, with a target price of 58 sen, saying that while the EV developments are encouraging, the road to recovery will take time.

That said, the shift towards EVs does look like the most meaningful step forward for Tan Chong in years. Local assembly of the TQ Wuling Bingo and the Perodua EV painting programme give the group a more relevant role as Malaysia moves deeper into electrification.

At Carz.com.my, we see the Perodua partnership as a genuinely big deal, a much-needed boost for Tan Chong and a sign that the industry still sees value in what the group can offer.

However, as for the TQ Wuling Bingo, we’re holding our judgment for now. Its success will come down to pricing, especially in a segment already led by Proton with its well priced e.MAS 5 and potentially the soon-to-arrive Perodua QV-E, which is shaping up to be another crowd-puller.

Until the Bingo’s price is clear, it’s hard to say how much it can contribute to Tan Chong’s turnaround.

Source: NST