Automotive Accessories industry Malaysia

Malaysia has one of the highest number of automotive accessories retailers per capita in the world. For a population of 27 million, there are over 4,000 automotive accessories retailers spread across the country. The automotive accessories retailers can be divided into a few groups:-
- Tinting or window film applicators - 50%
- Audio and automotive electronics - 30%
- performance tuning and performance parts - 15%
- body kits and cosmetic enhancements - 5%

I didn't categorize wheel and tyres as these should be classified as replacement parts and many cross sell wheels with tyres and also offer oil change and other related services.

Being in a tropical country, adding solar control window film makes a lot of sense to reduce the internal temperature of the vehicle. It is also one of the biggest no brainer automotive product to sell as 98% of cars are now fitted with solar control window films. This business is also highly profitable if the retailer does not slash prices to attract customers. On average the profit margin of applying window film on a car is approximate 500% to 800%!! Hence you can see almost 1 to 2 window film applicator shop in every suburb.

Audio and automotive electronics used to make up the largest numbers of automotive accessories retailer prior to the introduction of window films. In the 1980s and early 1990s, cars that rolled out from the assembly line didn't offer much in terms of high quality audio or alarm systems, these automotive accessories retailers took the opportunity to offer higher quality audio system and installed alarm systems. As time progressed the automotive manufacturers included better audio and improved security systems, this business is no longer as lucrative as it used to be.

Performance tuning and performance parts segment of the automotive accessories market has been consistent throughout as more new products were introduced to match new models of cars. Since the introduction of the Sepang F1 race track and further developments in the motorsports industry the performance tuning and performance parts business has seen some growth.

Body kits and cosmetic enhancement industry maybe the smallest of the 4 main automotive accessories segments but this industry has grown significantly in the last 10 years. The body kits and cosmetic enhancement industry is mainly fueled by the enthusiasm from the young car owners who want to create an identity for themselves and make their cars look different or some would say better. As the prices dropped, more car owners opted to add complete body kits or just simple parts such as small tail spoilers, front chin, side skirts or LED day driving lights.

Having so many automotive accessories retailers does not always mean good business. On average of 200 automotive accessories retailers close down after Chinese New Year every year. Some of them did not even last 1 year in business while many others did a little better but did not survive beyond 3 years. On the surface the automotive accessories business may look attractive but it is more cut throat than many people realize. More than 50% of the new start up automotive accessories retailers are nothing more than an apprentice who formerly worked with another automotive accessories retailer who thought that he could replicate the same business on his own. Gathering some seed capital from family and friends these ex-apprentice attempt to do business the same way they saw their previous employer did. However having learn their skills and knowledge from work experience and not having sufficient technical or no real technical training at all, these new start ups are basically risking more than they bargained for.

I have personally observed many cases where the inexperienced or lack of experience or simply lack of technical knowledge technician (or some cases owner of the automotive accessories shop) was dumb founded when he did not know how to handle certain types of cars because he had never experienced working on them before. For someone who was properly trained (attended technical schools) he would know how to handle it. For the car owner, the risk is in dealing with some of these new start ups if the background of the owner and technicians are unknown. Giving them a rare car such as an Aston Martin, Ferrari or Lambo could prove costly to the owner not in terms of the items bought but the potential damage that could happen if the technician is unfamiliar with the car.

The Malaysian public being car crazy, despite crazy car prices, will fuel the survival and growth of this industry. There will always be someone out there who will want to have their car windows tinted, get more power from their engine, buy new body kits or upgrade their alarm systems.