PUTRAJAYA: France’s Groupe PSA, which was in the running to be the foreign strategic partner of national carmaker Proton Holdings Bhd (Proton), has tied up with Naza Corp Holdings Sdn Bhd to make Malaysia its manufacturing hub for Asean. The Peugeot manufacturer buys 56% stake in the Kedah facility

Groupe PSA and Naza Corp have signed the share sale and joint-venture agreements, whereby the French carmaker has acquired a 56% stake for an undisclosed sum in the Naza Automotive Manufacturing Sdn Bhd (NAM) plant in Gurun, Kedah.

Groupe PSA produces the Peugeot and Citroen (Europe’s second-largest carmaker after Volkswagen), which now controls Opel and Vauxhall.

The deal with Groupe PSA will also see Naza Corp becoming the sole distributor of Peugeot, Citroen and DS Automobiles in the domestic market and potentially Asean.

 Groupe PSA China and South-East Asia executive vice-president Carlos Gomes said the collaboration represented a “significant leap forward” for the French carmaker.

“The creation of the Asean hub in Gurun is a significant leap forward for Groupe PSA, which will lead to the development of a profitable business in the region as part of our ‘Push to Pass’ strategic plan,” he said at the signing ceremony between Naza Corp and Groupe PSA here yesterday.

“When we announced the ‘Push to Pass’ plan in 2016, we made a very big promise to establish Asean as an industrial base because we know that without that, we cannot have further development in volumes. To be able to grow internationally – this would be the right step,” said Gomes.

According to Groupe PSA’s website, the “Push to Pass” plan represents the first step towards the achievement of the group’s vision to be a great global carmaker with cutting-edge efficiency – and the preferred mobility provider worldwide for lifetime customer relationship.

Among the initiatives set out under the plan are reaching an average 4% automotive recurring operating margin from 2016 to 2018, 6% by 2021 as well as delivering 10% and 15% group revenue growth by 2018 and 2021 respectively.

Naza Corp and Groupe PSA are no strangers to each other after having collaborated for 10 years.

“We have had a good partnership with Naza Corp for 10 years. They have been a good partner in a country that is growing with a business-friendly government – these are the main reasons we choose to invest now,” said Gomes.

He added that the Peugeot 3008 and Citroen C5 Aircross would be “the perfect products to seduce the Malaysian customers”.

Gomes said Groupe PSA would look at export opportunities once the models have been rolled out to the domestic market.

“We will look at all Asean markets that are interested. We want to do business in a region that accounts for 600 million inhabitants – a market that’s forecast to grow beyond four billion cars. That’s music to our ears.”

Gomes added that Groupe PSA would ramp up investments in the NAM plant.

“We have to adapt the plant to the products, and then the investments will go further. We have to refresh the products, do specific toolings for each car and invest over the years because we plan to launch three SUVs in the next 18 months. We will expand out capacity depending on sales,” he said.

The NAM plant, which has been operational since 2004, has a workforce of close to 450 and an annual production capacity of 50,000 units. NAM is expected to become Groupe PSA’s export hub for the region, with a forecast volume of 18,000 units in 2019 and 21,000 units by 2020.

Groupe PSA, together with China’s Zhejiang Geely Holding Group Co Ltd, made headlines last year when they were in the running to acquire a stake in Proton from parent company DRB-Hicom Bhd.

However, last June, the national car company announced its tie-up with Geely over the Peugeot manufacturer following an extensive six-month evaluation.

Under the deal, Geely acquired a 49.9% stake in Proton from DRB-Hicom. However, it has majority control over the brand’s assembly and production operations.

In the lead-up to acquiring a stake in the national carmaker, it was reported that Groupe PSA and Geely were eyeing a 51% majority stake in Proton’s manufacturing plant in Tanjung Malim. The Government had given the green light for foreign parties to own a controlling stake in the factory.

Separately, Nasim Sdn Bhd, the official distributor of the Peugeot brand in Malaysia, is targeting sales of 3,600 units this year, Naza Corp group chief operating officer (automotive group) Datuk Samson Anand George said.

He said sales would be bolstered by the introduction of new models.

“Production at the plant isn’t fully grown yet. Over the next three years, we will ramp it up.

“Last year, Nasim sold less than 2,000 units,” Samson told reporters on the sidelines of the signing ceremony, which was witnessed by Prime Minister Datuk Seri Najib Tun Razak.

Samson said Nasim had a 1% market share of total industry volume.

“We want to grow our market share for local European makes. We had 18% before, so that’s our next target. Now, we have a 10% share of European makes in Malaysia.

“With the new models, we hope to achieve an 18% market share (of total European makes) within the next three years,” he said.

Total vehicle sales contracted for the second consecutive year in 2017 – down 0.6% from 580,085 units in 2016 – reflecting the downcycle of the market which started in 2016.

Vehicle sales have been forecast by the Malaysian Automotive Association to grow 2.3% to 526,500 units this year from 514,679 units.

– Sundaily