Bermaz Auto to distribute Peugeot in Malaysia
KUCHING: Excitement is in the air as Bermaz Auto Bhd’s (Bermaz Auto) newly formed associate, Berjaya Auto Alliance Sdn Bhd (BAASB), has been awarded exclusive distributorship of Peugeot models.
These include rights of aftersales and spare parts distribution for the Peugeot, Citroen and DS marques in in Malaysia by principal, Groupe PSA. Berjaya Corp owns the majority 51 per cent stake in BAASB while the promoters and key stockists owns the remaining 29 per cent.
MIDF Amanah Investment Bank Bhd (MIDF Research) observed that Bermaz Auto will be managing the business at BAASB, while the stockists will be responsible of addressing the critical issue of elevated spare parts pricing and parts shortages via alternative original equipment manufacturer (OEM) sourcing.
“Production of completely knocked down ( CKD) eugeot models will remain at Naza Automotive Manufacturing’s (NAM) Gurun plant, under the control of Groupe PSA,” it said in a review yesterday.
“Similar to the arrangement between Bermaz Auto and Mazda, finished CKD models will be sourced at fixed ringgit pricing, insulating BAASB from forex risk and ensuring a secure contribution margin.”
Since this is a straightforward distribution/trading business model, MIDF Research believes it is possible for BAASB to turn in a profit in the first year of operations.
“We estimate that Bermaz Auto’s share of BAASB’s earnings can hit at least RM1.5 million to RM2 million annually within the first two to three years, and this should grow as more new CKD models are introduced.”
Peugeot currently entails a network of 21 dealers in Malaysia (independently owned outlets), on top of a few outlets that are owned by Naza. At the current annual sales volume of about 2,000, MIDF Research believes this network size is more than sufficient for the time being.
“Therefore, the takeover of the Peugeot brand by BAASB involves migrating the dealers to a new distributor, without much capital outlay required for network build-up,” it said.
“We understand that Naza will likely remain as a dealer in the meantime, but could be looking to sell its outlets in the future and completely exit.”
Peugeot’s model mix in Malaysia is concentrated in the sports utility vehicle (SUV) segment, whereby only two models – the 3008 (priced at RM150,888-163,888) and 5008 (priced at RM166,888-179,888) SUVs – are offered in Malaysia currently.
“The new B-segment 2008 SUV is slated to be introduced next year, estimated to be priced at RM120,000 – this could become Peugeot’s bread-and-butter mass market model for the Malaysian market going forward, which will support a recovery in Peugeot sales volume that has dwindled in the past several years,” it added.
Looking ahead, MIDF Research is of the opinion that Bermaz Auto is possibly saving its balance sheet capacity for further, much larger brand expansion, which may involve it taking a controlling stake and a role in manufacturing operations.
“We think the ‘main course’ in Bermaz Auto’s brand expansion drive is the acquisition of the Kia franchise, which fills up gaps in Bermaz Auto’s current offering,” it suggested. “To give context, PSA gained control of Naza’s Gurun plant back in 2018 with the acquisition of a controlling 56 per cent to 61 per cent stake in NAM from Naza.
“The plant is currently producing marques under Groupe PSA i.e. Peugeot and Citroen, as well as for Korean brand, Kia, which is currently distributed by Naza Kia Malaysia.
“Naza has made public its intention to dispose its remaining stake in NAM as well as to exit the distributorship for Kia, which means that Kia would be actively seeking for not just a new distributor, but also a new home for its CKD assembly operations.”
Meanwhile, Bermaz Auto’s strong track record in reviving Hyundai (another major Korean marque) in the past, coupled with ready capacity at 29 per cent-owned Inokom suggests an ideal ‘marriage’ with Kia.
This is on top of the fact that Hyundai models are already being produced at Inokom and both marques (Hyundai and Kia) entail extensive platform sharing with one another.