Wednesday, December 30, 2009

GM Pulls Out from JV with DRB-Hicom

DRB-HICOM Bhd and General Motors Corp (GM) have mutually agreed to part company. Starting 1 January 2010, DRB-HICOM would no longer import GM cars into Malaysia, albeit Chevrolets would continue to be imported and sold.
I can't help but think that this has something to do with the lack of a level playing field in Malaysia's automotive sector. With so much done to protect a company like Proton from foreign competitors, other industry players have to struggle with slim margins and low volume sales.
As it is, GM is facing financial difficulties at home (back in the US). This makes it all the more difficult for it to continue being a big player in the Malaysian market.
What a lost opportunity this is. GM had expressed interest in setting up a manufacturing base in Malaysia, much like it has in Thailand. Clearly, this is not going to happen any time soon; not while a company like Proton continues to rely on market protectionism at the expense of foreign direct investment.
How can we expect foreign investors to come to Malaysia to set up an automotive manufacturing base if we continue to molly coddle Proton? Malaysia has already lost two decades of auto-manufacturing lead to neighbouring countries. Another lost decade may reduce Malaysia to a state of insignificance as far as major players in the automotive industry are concerned.
The writing is on the wall for Malaysia's automotive sector. Its contribution to government revenue continues to pale in significance compared to other sectors.
How much longer should this be ignored?
Addendum: Reportedly, car sales in Malaysia number around 500,000 units a year. Under GM's partnership with DRB-HICOM, Chevrolet sales would be more than 3,000 units in a good year. Sales have since fallen to fewer than 1,000 units.
Why is this not surprising, especially when Proton continues to have preferential treatment? Not only is this a turn off for foreign investors, Malaysian consumers also suffer from artificially inflated car prices.
It is rumoured that Naza is now interested to step in where DRB-HICOM left off. Well, good luck with that.


  1. You might not understand the issue but the right word to describe GM will be the Malay word - BONGKAK. If the car will not sell, why do you force your local partner to do most of the investment?

    Anyway, GM has only two models which I think is interesting - the Captiva and the Cruze. The rest are dated. Partering up with Naza also creates another issue - Chevy is close to the other half of Naza, while the other side already have mass market brands like Kia and Peugeot. They only have one plant, the one in Gurun, which is under the Kia/Peugeot team.

    Keep proton out of this. Why? You have a good blog and crying foul over Proton makes you like the rest of the blogs out there - cry babies without giving any positive input. Do u seriously think the government will close down Proton? No right? Dah tu, come out with ideas which can benefit Proton and others lah.

    Kan nampak cerdik sikit!

  2. Cyring foul over Proton makes a good blog bad? That's very simplistic, considering that positive input can be found in the most critical of remarks, provided you are willing to take note of the good in those remarks.

    I have no love lost for the US giant GM. Considering how Americans do business, I'm inclined to believe that GM memang bonkak.

    That doesn't mean the quandry Malaysia's automotive industry is in does not lie in the need to continue molly coddling Proton.

    So, no, I won't keep Proton out of this, for as long as it has something to do with causing Malaysia's automotive industry to be held back.

    I will continue to prod and question. Hopefully, someone cerdik would do more than just respond in knee-jerk fashion.

  3. then you will not help us Malaysians lah because you are asking PM to step down so that we can move forward. Get it?

    Its like a big stone which u can't move, but u still need to make the highway. So u go around it, but u need to be creative in how u wanna go around that stumbling block.

    get it?

  4. Huh? Ask the PM the step down? I'm not asking Dato Seri Najib to step down. Far from it.

    Under the circumstances, I think he's doing a good job, albeit I don't agree with some of his policy and other decisions.

    How is making suggestions for the good of the Malaysian public equivalent to asking the PM to step down? If anything, the PM would become more popular because he is seen as someone who is willing to make the tough decisions for sake of the rakyat in a wise and timely manner, like how he is working hard to remove general fuel subsidies in favour of targeted subsidies.

    What's unwise is pandering to populist sentiments that run Malaysia's finances into the ground. What's unwise is allowing Proton to remain complacent about its happenstance at the expense of the rakyat. What's unwise is giving opposition politicians the ammunition to spew populist propaganda come election time because the rakyat become increasingly disillusioned with Proton.