Perodua to buy RM7.5b worth of local parts in 2022, up 41.5% – RM1.3b capex incl new models, digitalisation – paultan.org

Based on its own standards, 2021 was a lean year for Perodua in terms of sales and manufacturing performance. There were many unforeseen circumstances beyond the carmaker’s control – Covid lockdowns and chip supply issues limited production, while a big final push was thwarted by unprecedented flooding in the Shah Alam area, where many of its vendors are located.

In the end, the market leader sold 190,291 units in 2021, a 13.6% drop from the 220,154 units recorded in 2020. The final tally fell short of P2’s 200k target, which was revised down from 214k in September. The original goal for 2021 that was set early last year was 240k. It was all down to production issues as Perodua sells whatever it makes – at the end of 2021, it had 70k outstanding bookings.

They’re aiming for a big rebound in 2022. If there are no disruptions, the target this year is a record 247,800 units, a massive 30.2% jump from 2021. Production, the most important aspect, is slated to increase 37.5% to 265,900 units this year.

New models (D27A Alza and two facelifts to debut this year) and higher production volume means more parts are needed, and the Malaysian automotive ecosystem will benefit from the RM7.5 billion Perodua has allocated for parts this year. That’s a 41.5% jump from the RM5.3 billion spent on local parts this year.

Perodua says that it plans to further maximise component parts localisation as part of industrial development, and that it currently has R&D activities at its suppliers. As it stands, P2 already boasts very high localisation – the Ativa, although a shared model with Japan and Indonesia, debut last year with 95% local content, the highest ever rate at launch for Perodua.

As for capital expenditure, Perodua’s planned total investment for 2022 is RM1.3 billion, a sharp rise from the RM696.3 million spent in 2021. A big part of this is for new models (RM529.1 million). The other big allocations are for “buildings, land and roads” (RM381.3 million) and “plant improvements and transformation” (RM321.3 million).

The latter includes efforts to increase production volume (improve takt time in factory-speak) at Perodua Global Manufacturing – the newer and more flexible of the two plants in Sg Choh that rolls out the Axia, Bezza and Ativa.

Smaller but still significant are amounts set aside for “R&D enhancement” and “digitalisation”. The latter is something new in P2 presentations, and it includes internal (IT and cybersecurity, online communication platforms, online event registration) and external initiatives. Customers can expect “connected vehicles” and digital owner’s manual and vehicle sales orders in the future. P2 is also doing an IR 4.0 readiness assessment for its suppliers.

There’s bound to be more, as Perodua mentioned that it is looking to “initiate collaboration with other Malaysian companies to undertake big/disruptive venture,” while touching on Malaysia’s high internet penetration and mobile subscription rate, reduction of the number of bank branches and the increasing trend of e-payment. Sounds like hints at a new financial/payment product.

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