SOURCE Website
KUALA LUMPUR: It's all systems go for the local assembly of two Volkswagen models.
For VW fans, this is welcome news as it means a lower entry point to German car ownership.
DRB-Hicom and Volkswagen AG are looking at starting production in the fourth quarter of 2011 with the assembly of the Passat sedan first followed by the Jetta at the DRB-Hicom plant in Pekan, Pahang.
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| Mohd Khamil (left) exchanging documents with VW head of sales (China/Asean) Wei Ming Soh. Witnessing the event are Najib and Klingler. |
The cars will initially be made for local consumption and later exported to other Asean markets.
Speaking at the ceremony where DRB-Hicom signed an exclusive collaboration and licence agreement with Volkswagen, VW AG management board member Christian Klingler said: "Developing the market potential of the Asean region is of major significance for the Volkswagen Group’s long-term growth strategy."
The deal worth RM1bil followed a Memorandum of Understanding signed by both parties in August to study the feasibility of the local production of Volkswagen passenger cars in Malaysia.
DRB-Hicom and VW have agreed to share costs in a ratio of 70% to 30% respectively.
Klingler said the Malaysian market, where more than 570,000 vehicles were sold in 2010, played an important role in the VW’s strategic planning.
"We will be using existing structures and capacities at the DRB-Hicom plant in Pekan to systematically extend our presence in the Malaysian market of the future."
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VW has plans to build further Volkswagen models for the Malaysian market on the basis of a local full scale production in a second expansion phase from the end of 2012, he said, with some quarters suggesting the Polo was a possibility.
DRB-Hicom group managing director Datuk Seri Haji Mohd Khamil Jamil said the Pekan plant has a maximum capacity of 96,000 vehicles a year.
“To date, our capacity is about 25,000 to 30,000 (units) per annum, so there’s still a lot of space to accommodate VW."
He also said DRB-Hicom and VW would step up localisation to achieve local content of as much as 40%.
Both parties would identify suitable local vendors, not only to supply parts and components for local assembly but also to look into the global supply to VW operations, he added.
On the Passat and Jetta, Mohd Khamil and Klingler did not want to disclose the specifications.
Mohd Khamil said it was also too early to reveal prices. On whether DRB-Hicom would be assembling Audi, which is part of the VW group, Mohd Khamil said it was premature to say if a deal was in the pipeline.
Also present at the signing ceremony were Prime Minister Datuk Seri Najib Tun Razak and Minister of International Trade and Industry Datuk Seri Mustapa Mohamed.
In his speech, Najib said the government offered various incentives for car makers such as tax relief under the National Automotive Policy.
He said VW's entry with advanced car technology and expertise would add value to the automotive value chain and holds the promise of turning Malaysia into a regional hub.
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| Could this little 'un be up for local assembly in the not too distant future? Many will hope so. |
Najib said Malaysia was in a strategic position to serve as a regional hub because of its accessibility by road, air and sea.
He said the partnership with VW "will also advance our local automotive technology and transfer technical expertise for the assembly, testing and quality assurance of CKD models."
Najib showed a humourous side, saying that as MP for Pekan, he would make it a point to personally monitor the development of the partnership. His statement was greeted with laughter from the audience.
DRB-Hicom has the largest automotive production network in Malaysia and builds passenger cars and commercial vehicles at its plants in Pekan and Malacca.
DRB Hicom is also a car dealer and importer with a nationwide sales network.
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