In Asia the automotive market is relatively sterile with the usual few car companies dominating the top sales figures. Companies like Toyota, Honda, Nissan, Mercedes, BMW and Mazda do well but secondary brands that are quite prominent in other countries such as Kia, Hyundai, Renault, Ford, Citroen, Ssangyong, Peugeot, Volvo, Alfa Romeo and Fiat all struggle in Asia.
VW was omitted from the list because at one time it managed decent sales figures in Malaysia and Singapore but due to their poor reliability record their sales have taken a big beating and the consumer confidence have really eroded.
Brands like Kia, Hyundai, Renault, Citroen and Peugeot struggle to gain consumer confidence. The reasons vary for each car company. Kia struggled due to poor marketing and insufficient after sales support, Hyundai struggle due to outdated models that need urgent replacement. Citroen and Peugeot suffered from poor reliability image and this in turn also cause their resale value to drop tremendously. The distributor often do not stock sufficient spare parts which cause frustration with customers facing problems with their cars.
Ford's problem is the poor models selection. The main selling model is the Ranger pick up truck. The other models did not appeal to buyers and seem outdated in their design compared to the Japanese rivals. The Ford models appealed more to the Americans and didn't suit Asian buyers' tastes.
all of these brands have been in Asia for decades but cannot seem to grow their presence. Mazda at one time was in this predicament but with the models and aggressive pricing strategy Mazda managed to grow significantly over the years and have now created good customer base.
In order for secondary brands to do well in Asia they need to have a very solid foundation for sales and after sales support. The distributor needs to provide sufficient spare parts and create a customer buy back program to instil confidence that the car's value will not depreciate much more than Japanese rivals. With strong after sales support it will reduce the level of value depreciation and gradually new customers will be attracted to the brand.
In recent years Volvo have managed to turn around their business in Asia with their aggressive hybrid campaign which has been paying off. The new XC90 and the S90 models are gaining popularity and this has spurred more new buyers to consider Volvo. The dealership network has also expanded which helps with customer confidence.
Turning around the brand in Asia is not impossible but the distributors need to employ the right strategy to make it work for them. It also depends on how much the distributors are willing to invest to promote and market the brands.
Monday 19 February 2018
Tuesday 13 February 2018
Malay dealers facing problems with Proton's new management
Ever since Geely took over Proton in 2017 there has been major shake-ups in the company's operations. Many useless staff have been terminated and vendors have been forced to cut prices or face losing their business to China parts suppliers. Now the turn has come to the dealers. The new management's aim to turn the company around is nothing short of drastic but these are necessary changes for the better of the company's future. The company has been plagued with mismanagement, corruption and poor quality control for decades. The new team from China is pushing through with these changes to improve the image of Proton.
The recent fiasco is about getting dealers to commit to open up 3S centres (Sales, service and Spare parts) or close their dealership. In many ways this is a better direction for the company. Previously there were hundreds of small dealers that only focused on sales and had no service centres. These dealers opened up a small shop and placed 2 cars on display and just sold cars. Now Proton wants to ensure that the customers are able to have access to good after-sales service. Converting a normal dealership to a 3S centre is no easy feat since the investment cost is very high but the 3S centre will provide good long term business for the dealer.
The problem now comes to the small Malay owned dealerships that previously enjoyed privileges from Proton which allowed them to buy cars on credit terms and then pay when it is sold, this is like doing business without using any capital. Proton's management now wants payment upfront for cars sold to dealers and eliminate the business credit concept altogether! Naturally this will be still work out for dealerships with sufficient capital to buy cars but small dealerships will end up closing. Most of the Malay owned dealerships are very small and do not have much working capital so all these dealers have ganged up to lodge an official complain to the Government on the grounds of having a racist policy. This naturally a lame attempt to try to gain back the business advantage but it is clear to see that this new policy is not racist in any way. It is only there to improve the business of the company. It is a coincidence that the new policy affects mostly the Malay owned dealerships.
Since Proton is no longer linked to the Government it is unlikely they will step in and intervene regarding this policy. The protesting group will have to suck it up and accept the fact that it is time they learned how to do business the right way. Having enjoyed the years of benefits from Proton one would think that these business owners would have amassed enough wealth to convert themselves into a 3S centre or expand the business. The key point in this is complacency. It has always been a problem with Malay owned businesses that were given financial support from the Government. This time the support has gone and it is time to wake up!
The recent fiasco is about getting dealers to commit to open up 3S centres (Sales, service and Spare parts) or close their dealership. In many ways this is a better direction for the company. Previously there were hundreds of small dealers that only focused on sales and had no service centres. These dealers opened up a small shop and placed 2 cars on display and just sold cars. Now Proton wants to ensure that the customers are able to have access to good after-sales service. Converting a normal dealership to a 3S centre is no easy feat since the investment cost is very high but the 3S centre will provide good long term business for the dealer.
The problem now comes to the small Malay owned dealerships that previously enjoyed privileges from Proton which allowed them to buy cars on credit terms and then pay when it is sold, this is like doing business without using any capital. Proton's management now wants payment upfront for cars sold to dealers and eliminate the business credit concept altogether! Naturally this will be still work out for dealerships with sufficient capital to buy cars but small dealerships will end up closing. Most of the Malay owned dealerships are very small and do not have much working capital so all these dealers have ganged up to lodge an official complain to the Government on the grounds of having a racist policy. This naturally a lame attempt to try to gain back the business advantage but it is clear to see that this new policy is not racist in any way. It is only there to improve the business of the company. It is a coincidence that the new policy affects mostly the Malay owned dealerships.
Since Proton is no longer linked to the Government it is unlikely they will step in and intervene regarding this policy. The protesting group will have to suck it up and accept the fact that it is time they learned how to do business the right way. Having enjoyed the years of benefits from Proton one would think that these business owners would have amassed enough wealth to convert themselves into a 3S centre or expand the business. The key point in this is complacency. It has always been a problem with Malay owned businesses that were given financial support from the Government. This time the support has gone and it is time to wake up!
Wednesday 7 February 2018
poor battery life!
Many people who read my blog could naturally think that I am a European car fan but I would like to reinforce my points about the pros and cons of both European and Japanese cars. Japanese cars such as Toyota are known for their outstanding reliability which I believe is well deserved since it is rarely that you see a Toyota break down on the side of the road. The durability of the cars are second to none and it is also the reason why terrorists love it in the Middle East since the models such as the Hilux or the LandCruiser doesn't break down!!
Despite the amazing durability and the punishment Japanese cars can take the one thing that they fail miserably at is battery life! The average Japanese car battery life is between 12-18 months! Rarely do you find a Japanese car with a battery life that extends beyond 2 years. I know they usually fit a smaller battery to save weight and this small battery is good enough to power up the electronics in the car but it does nothing for durability. It is also very annoying to the car owner to have to change batteries every 12-18 months. In comparison the German car such as BMW, Mercedes or Porsche which have a much larger battery would easily last 5-7 years! If you work it backwards the cheaper and smaller battery in a Japanese cars that you change more often will end up costing you more than changing 1 large battery in a European car! this is not taking into account the down time you have to endure when the car's battery goes flat!
Till this day, Japanese car manufacturers have not designed a car that can have a long lasting battery or at least they need to rework the electrical system to be less battery hungry! Surely it cannot be that difficult!!
The other point I would like to bring to the readers' attention is the battery life of the second battery in any Mazda car with the Skyactiv engine. The Skyactiv models come with the engine start/stop function and the restart motor is powered by the second battery. This secondary is notoriously expensive and offer a ridiculous use life of 12-15 months! to make matters worse, if the owner of the car chooses not to replace this battery the car's start/stop (called iStop) function will not work!! the concept is so stupid because it is contradictory to Mazda's objective of saving fuel and saving cost! the cost of the replacing battery is more than the cost of fuel savings over the life of the battery. The car would be better off without the iStop function since it costs the owner more to run it than the fuel savings they can get! It defeats the purpose totally and renders the system useless. Mazda dealers have receive numerous complaints about it but nothing can be done about it. In my opinion, it is a very stupid concept. On one hand you want to promote fuel saving but on the other hand you are incurring more cost for the car owner to replace the stupid battery that costs more than the amount of money saved from fuel savings. It is obvious that not enough thought have been put into this before implementation.
Despite the amazing durability and the punishment Japanese cars can take the one thing that they fail miserably at is battery life! The average Japanese car battery life is between 12-18 months! Rarely do you find a Japanese car with a battery life that extends beyond 2 years. I know they usually fit a smaller battery to save weight and this small battery is good enough to power up the electronics in the car but it does nothing for durability. It is also very annoying to the car owner to have to change batteries every 12-18 months. In comparison the German car such as BMW, Mercedes or Porsche which have a much larger battery would easily last 5-7 years! If you work it backwards the cheaper and smaller battery in a Japanese cars that you change more often will end up costing you more than changing 1 large battery in a European car! this is not taking into account the down time you have to endure when the car's battery goes flat!
Till this day, Japanese car manufacturers have not designed a car that can have a long lasting battery or at least they need to rework the electrical system to be less battery hungry! Surely it cannot be that difficult!!
The other point I would like to bring to the readers' attention is the battery life of the second battery in any Mazda car with the Skyactiv engine. The Skyactiv models come with the engine start/stop function and the restart motor is powered by the second battery. This secondary is notoriously expensive and offer a ridiculous use life of 12-15 months! to make matters worse, if the owner of the car chooses not to replace this battery the car's start/stop (called iStop) function will not work!! the concept is so stupid because it is contradictory to Mazda's objective of saving fuel and saving cost! the cost of the replacing battery is more than the cost of fuel savings over the life of the battery. The car would be better off without the iStop function since it costs the owner more to run it than the fuel savings they can get! It defeats the purpose totally and renders the system useless. Mazda dealers have receive numerous complaints about it but nothing can be done about it. In my opinion, it is a very stupid concept. On one hand you want to promote fuel saving but on the other hand you are incurring more cost for the car owner to replace the stupid battery that costs more than the amount of money saved from fuel savings. It is obvious that not enough thought have been put into this before implementation.
Monday 5 February 2018
Cars that are sold for more than a decade!
Every now and then a car company will decide to keep making a particular model in their line up for over 10 years! VW was famous for making the Beetle for over 10 years but that ended in the 1970s but it is less common the modern era with competition being so stiff among car makers. Replacing a model every 7 years is already considered too long and even the Germans makers like BMW who traditionally replace models every 7 years have cut it down to 6 years. VW have gone one better by cutting it down to 5 years with the Golf model.
Mercedes Benz also jumped on this bandwagon and cut the A class life cycle to 5 years. The competition among car makers force them to work faster to replace models to keep their models looking fresh and attract more buyers. Porsche also followed this route with newer models introduced every 6 years. Prior to this Porsche's 911 were built for over 10 years prior to the 993 model. After that fresh models were rolled out every 7 years.
Then there are car companies that have no clue what they are doing or have no budget to design new models and continue to build severely outdated models. Mitsubishi is one of them. The Lancer has been selling since 2008 and the same model has been face-lifted a few times but essentially it is the same car. Mitsubishi have their own set of problems and this without a doubt have affected their ability to produce new models. Seeing that the demand for the Lancer is dwindling they just focus efforts on SUVs and trucks.
In this modern era, car companies cannot afford to slack off in the new product development department. Keeping up with the other car makers will impact their survival and profitability. It is never easy to keep developing new models but it is a necessity borne out of competition and survival.
Companies like Honda have done a great job to keep their models looking fresh and in the same time appeal to the younger buyers. This strategy has paid of well seeing that Honda has overtaken Toyota in several markets.
Mercedes Benz also jumped on this bandwagon and cut the A class life cycle to 5 years. The competition among car makers force them to work faster to replace models to keep their models looking fresh and attract more buyers. Porsche also followed this route with newer models introduced every 6 years. Prior to this Porsche's 911 were built for over 10 years prior to the 993 model. After that fresh models were rolled out every 7 years.
Then there are car companies that have no clue what they are doing or have no budget to design new models and continue to build severely outdated models. Mitsubishi is one of them. The Lancer has been selling since 2008 and the same model has been face-lifted a few times but essentially it is the same car. Mitsubishi have their own set of problems and this without a doubt have affected their ability to produce new models. Seeing that the demand for the Lancer is dwindling they just focus efforts on SUVs and trucks.
In this modern era, car companies cannot afford to slack off in the new product development department. Keeping up with the other car makers will impact their survival and profitability. It is never easy to keep developing new models but it is a necessity borne out of competition and survival.
Companies like Honda have done a great job to keep their models looking fresh and in the same time appeal to the younger buyers. This strategy has paid of well seeing that Honda has overtaken Toyota in several markets.
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