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in this study have a new model in their stable. From Toyota‟s 2007 Vios, Proton‟s 2007 Persona and 2008 Saga and the recently launched 2009 Exora, Perodua‟s 2007 Viva, Nissan‟s 2007 Grand Livina and the 2009 Honda City, all these models were either developed during or just shortly before the crisis struck. If these models were not developed and therefore were not available for launch, the sales of the said OEMs would probably not be as good. Managing the Supply Chain OEMs also need to be concerned about their suppliers. During the development process, some suppliers may have difficulty with financing. Especially during these trying times when the revenues are fast reducing due to shrinking demands. Credit lines tend to become a big problem due to the poor credit rating of the automotive industry in general. At this time, the OEM must be firmly behind the supplier to ensure that the new model is developed as per design intent or else, certain components may not be ready at the time of launch and this would not be acceptable at all. The problem is that the financial distress is not only being experienced by the smaller suppliers but even by the big global players such as Delphi, Continental and Denso just to name a few. For Malaysian National Car maker Proton, where product development is carried out holistically in Malaysia, getting the full support from the suppliers is very crucial. Fortunately, the economic slowdown in Malaysia has yet to reach its peak. Nevertheless, many suppliers are already in desperate times, trying to secure financing and extending credit lines. Without the sufficient funds, product development may not be comprehensive. Hence, Proton would have to lend an extra hand to cover for some of the vendor related product development costs. The main problem here is that the cash situation of Proton as a company will also be under severe threat. This activity may potentially result in the product development costs escalating well beyond the RM500 Million mark, which can be financially impossible. This is where the government funds become extremely important to ensure the complete automotive eco system is sustained. The recently announced Automotive Development Fund (ADF) is one such government initiative from the Malaysian government with primary intent of saving the automotive vendor community in Malaysia. Toyota has a system called “Kieretsu” whereby the vendors are part of the “Toyota family”. In this way, Toyota is able to capitalise on the economies of scale and procurement can be centrally controlled from Japan for all its manufacturing outfits including subsidiary companies such as Daihatsu and Perodua. In doing so, raw materials can be purchased as prices significantly are lower than any competitor is able to get. This gives Toyota the upper hand to reduce the Bill or Material (BOM) costs even further. Bringing the Right Product to Market Currently, since most customers have concerns about making purchases on big ticket items, it does not mean they will not make the purchase at all. Instead, they may start to scout around and compare products on offer from various OEMs. When their financial status permits, they will quickly make the purchase based on the decisions made earlier. This means, the purchase is merely delayed. Therefore, OEMs cannot afford to stop offering the products just because the economy has slowed down. Rather, entice the customers so that the moment they can afford the car, the first one they consider is the one which has won their hearts when they were in the financial difficulty. UNITAR E-JOURNAL Vol. 6, No. 2, June 2010 87
In this regard, it can be noted that Naza Kia has indicated that it intends to bring in the Kia Forte, a C-Segment sedan which is very popular in Korea, China and parts of Europe into the Malaysian market. Judging from the success of the Toyota Vios, Honda City and Proton Persona, this car may have a high possibility of success since most of the cars mentioned are also in the C-Segment Sedan category which is a very dominant category in the Malaysian market. The Proton Exora, Proton‟s first attempt at a Multi Purpose Vehicle (MPV) is also a very brave move. The vehicle was launched on April 14 2009. This is the beginning of the economic slowdown of the Malaysian economy. So far bookings have been quite positive for a typical launch of this magnitude. Given that the economy is not at its best health, and that this is the first MPV from Proton, especially with a 1.6 Litre engine, the number of units sold is very encouraging. Initial reports by a select few journalists who were privileged to test drive the vehicles shortly before the launch have been nothing but praise. But it will take a lot more than merely journalist evaluations to secure bookings and ultimately sales of this kind of vehicle. The MPV market in Malaysia has been growing steadily over the years. Currently, total MPV sales is approximately 11% of Total Industry Volume and with more players introducing MPV‟s recently, that ratio may well grow. The recent success stories have been the Toyota Avanza, Toyota Innova and Nissan Grand Livina. It will be interesting to see how the Proton Exora will fare in this segment. The recent launch of the Perodua Alza, the latest MPV to hit Malaysian roads was launched on November 23 2009. With the fuel price at RM1.80 and the recently adopted ruling where all occupants of a vehicle are required to buckle up their seatbelts, the potential rise in the number of MPV‟s on Malaysian roads is highly likely. Unfortunately, the author wishes to point out that at the time of writing this article, the sales figures for both the Proton Exora and Perodua Alza were not available. Inventory Management Most car manufacturers have to keep some level of inventory. This is because the time it takes between the cars being produced to when the cars are delivered to the customers may take at least 2 weeks. Some companies forecast what the customers will want to buy and produce the cars in advance. In this way, a potential customer may get delivery of the new car very quickly since the car is already in stock. However, this approach has its limitations. For example, it takes at least 3 months lead-time for the automotive suppliers to order raw materials in order to produce the component. This is especially true when the component requires raw materials to be ordered from overseas. When the OEM has ordered these components, it has to assemble the vehicles quickly since some of these components have a shelf life and also once these components have been ordered, the OEMs need to honour the orders come what may. It is when the forecast goes wrong that all the plans go haywire. Stockyards pile up with “the wrong cars”, cars which were built but nobody wants to buy. Typically, the ultimate stock level for an OEM should be about 1.5 months worth of stocks. For example, if an OEM sells 4,000 cars a month, then there could be up to 6,000 cars in stock at any given time. However, the current stockpile of most OEMs the world over is very much higher than this. Due to this, production has been slowed down to curb the number of unsold cars in inventory from growing to an uncontrollable figure. In some European and Japanese car factories, production has ceased since December and some companies have even given extended Christmas holidays 4 . 4 “Today, it was reported BMW’s Mini plant had quietly let slip about 90 more temporary workers over the Christmas break and Honda extended its Christmas holiday shutdown all the way to June.” – “THE UNITAR E-JOURNAL Vol. 6, No. 2, June 2010 88
Page 1 and 2: THE 2008 FINANCIAL CRISIS AND THE S
Page 3 and 4: The stimulus package as a whole is
Page 5 and 6: Currently, the approval rate for ca
Page 7 and 8: large as Toyota, which has a volume
Page 9: Strategies Employed by Nissan Up un
Page 13 and 14: would have to bring in the car to t
Page 15 and 16: REFERENCES Bernama News Agency. (Ma
Page 17 and 18: 2007 Model Jan Feb Mar Apr May Jun
Page 19 and 20: This data shows the sales of B-segm
Page 21 and 22: Table 12 Registered Sales of Cars i
Page 23 and 24: Table 16 Registered Sales by OEM fo

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