industry outlook for automotive - medac · 2) financial system & practices 3) cost structure...
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INDUSTRY OUTLOOK FOR AUTOMOTIVE
BACKGROUND
• This paper is a document that provides insight of Malaysian automotive ecosystem andaddress the opportunities as well as the potential of transforming the value chain ecosystemtowards National Automotive Vision.
• The National Automotive Vision as highlighted in the National Automotive Policy (NAP) 2020aims to make Malaysia a hub for:
i. Exports of vehicles;
ii. Exports of components and spare parts;
iii. Automotive research and development (R&D);
iv. Development of automotive and mobility related technologies; and
v. Vehicle component testing.
• As at today, Malaysian automotive ranked the third position in ASEAN after Thailand andIndonesia. With current capabilities of 27 vehicle manufacturers/assemblers in Malaysia and641 parts and components manufacturers. Over the years, exports of parts and componentsshow positive trends since 2015. Malaysia has big potential to out grows its own value chaincapabilities embarking the new era of automotive and mobility.
Natural Resources
Refineries
Iron Smelter
Steel Refiners
Petrochemical
Non Ferrous Smelters
Rolling Mills
Large foundries
Large forgers
Iron oreAluminium
Oil
Cast iron
Ca
st ir
on
, wro
ug
ht
iro
n, e
tc
Steel Steel
Machine Makers
Engineering Design
DESIGNERSProduct Design
Tool Makers
Mould Base, Die sets castings
Machine bed castingsForged Machine parts
Steel bars, plates, etc
Machine design
Tools design
Tier
2 a
nd
SM
Is
Par
ts
Man
ufa
ctu
rers
Tier
1
Co
mp
on
ents
M
anu
fact
ure
rs
Sub Assemblers
Assemblers(OEMs)
Markets
ComponentsParts
Parts
Mould, Jigs, Die etc
Pro
du
ctio
n
M/C
, Tra
nsf
er
M/C
Machine tools
Jigs, robotic etc
Plastic resins
Bars, Plate
Stee
l b
ars
, p
late
s,
etc
RESOURCE SECTOR
PRIMARY SECTORSUPPORT SECTOR
MANUFACTURING SECTOR
Vehicle Inspection
CentreRemanufacturing Centre
ATF Centre
Workshop
AFTERMARKET SECTOR
Parts & Components CentreConsumer
New Vehicle Dealership
Used Vehicle Dealership
vehicle
veh
icle
Tra
de
in v
ehic
le
Serv
ice
&
Ma
inte
na
nce
parts
Purchase parts
Roadworthy
Not roadworthy/ voluntary
parts
pa
rts
pa
rts
parts
recovered materials
parts
parts
vehicle
vehicle
parts
AUTOMOTIVE VALUE CHAIN ECOSYSTEM
FUTURE TREND AND OPPORTUNITIES
ARTIFICIAL INTELLIGENCE
BIG DATA ANALYTICS (BDA)
INTERNET OF THINGS (IoT)
ADVANCED ROBOTICS (SENSOR FUSION)
3D PRINTING
Manufacturing
ClusterExample Products
Metal
Chassis parts, cylinder head, suspension
system, exhaust system, wheels, engine
components, transmission components,
brake system
Plastic
Instrument panel, bumper, side mirror, fuel
tank, door trim, floor console, engine
cover
Electrical &
Electronics
Wire harness, sensors, switches, ECU,
batteries, headlamp, ADAS system,
alternator, aircondition system
Rubber
Weather strip, engine mounting, tyre,
radiator hoses, insulator, glass channel,
dust cover, fuel hoses
Others
Seat belt, airbag, floor carpet, seats,
automotive safety glass, insulator,
headlining, NVH components
MALAYSIA AUTOMOTIVE VALUE CHAIN
• Malaysia automotive industry ecosystem comprises of 641 suppliers from various
manufacturing cluster This cluster include cluster from metal, plastic, electrical & electronics
and rubber.
• By year 2030, the number is expected to grow to 1,285 suppliers, considering the total
production volume (TPV) growth in Malaysia is expected to increase to 2.03 mil unit vehicles
by 2030.
1) Management & Leadership
2) Financial System & Practices
3) Cost Structure & Analysis Tools
4) Global Sourcing & Marketing Strategy
5) Supply Chain Integration
6) Customer Focus
7) New Model Introduction Capability
8) Manufacturing & Quality
9) Safety
10) Technology Investment
11) People & Performance
TRENDS, OPPORTUNITIES AND GAP ANALYSIS
5.0
4.3
5.0
4.6
4.9
5.0
4.9
5.0
4.6
5.0
1 2 3 4 50
The benchmarking results indicates the
inability of automotive Malaysian SMEs
in major competencies such as:
• To understands the process on
how the organisations conceive,
manage and monitor their
strategic direction;
• To understand their products'
costs and control them;
• To develops and manages
technology, including production
technology;
• Managing quality through the
manufacturing process; and
• Engages with the global industry
3.8
2.8
3.3
2.4
3.1
3.0
3.4
2.1
3.2
3.2
3.4
*Avg: 3.1**Avg: 2.0
***Avg: 4.8
*Average Malaysian SME suppliers level, based on ASEP data
from 2013 – 2018
**Average Malaysian SME suppliers during early implementation
of NAP2014
*** Average global suppliers
• MARii conducted a benchmarking activities through Automotive Supplier Excellence Program
(ASEP) through 405 companies by measuring their 11 core of competencies as below:
• In summary, Malaysian supplier is at average 3.1 compared to global at average 4.8
Level1 Level 2 Level 3 Level 4 Level 5
Global Supplier
Engineering services
Component supplier / Tier 2
Engineering services
Component supplier / Tier
2
Original Design Manufacturer
(ODM)
Module supplier / Tier 1
Module supplier /
Tier 1
At this moment, the design and development capability benchmarking indicates that
only handful of local supplier are currently at level 3
Gap to be improved
Average Malaysia
Supplier
TRENDS, OPPORTUNITIES AND GAP ANALYSIS
ISSUES & CHALLENGES FACED BY THE AUTOMOTIVE SUPPLIERS
1.Saturated
domestic
production volume
2. Accelerated
change of
technologies
3. Emergence of
software as a key
differentiating factor
4. OEMs encounter
increasing
investment needs
and margin
pressure
5. Competition
between large scale
suppliers & SME
suppliers
Saturated domestic
production volume
will put current
supplier business
models at stake:
• New growth areas
needed
• Business model
review necessary
• Further
consolidation
pressure
• Drastic cost
reduction
requirement
Technology shifts
require suppliers to
invest in new and old
technologies in
parallel:
• High financial
burden
• No immediate ROI
• M&A with increased
importance
• New competitive
landscape
• Lack of facilitation
and financial
support to form
joint venture with
foreign vendors.
Suppliers need to
build up
competencies fast:
• Old competencies
will often not work
anymore
• New competencies
hard to build up
• Cultural mindset
change required
Suppliers will face
even higher cost
pressure:
• Further growing
pressure on
component prices
• Competitive
pressure from
disaggregation &
standardization
• Lower room for
differentiation
• Difficult access to
data driven
business model
Majority of the
suppliers are SMEs.
• High competition
with MNC/large
suppliers when
supplying goods
to other countries.
• Tend to have
limited resources
and a lower
threshold to
absorb risks,
especially when
operating in
intense
competitive
markets
Based on study conducted by MARii, the automotive parts and components industry has seen a
continuation of global growth where suppliers are expected to face five main challenges as per
below:
All rights reserved. The material may not be reproduced or distributed, in whole or in part, without the prior written permission of MARii.
Low HighEffort/Value
High
Low
Risk/Cost
VDP PRIOTISATION
1.Human capital developmenti)local manpower
ii)skill manpoweriii) professional
2. Enhancement of productivity and process
1.Centre of excellencei) Testingii) Design & simulation
2. Advance Technology3. Financial Assistance4. Export promotion5. Business diversify6. Dev of TDM
1. Development of local system Integrator to support IR4.0
1. ISO certification2. 5S
SUPPLIER COMPETITIVENESS LEVEL ROADMAP
THANK YOU
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