KUALA LUMPUR: Sime Darby Bhd expects vehicle distribution and retail under its unit Sime Darby Motors (SD Motors) to remain the core contributor to group profits, especially in the luxury segment in China.
SD Motors managing director Andrew Basham said its focus on the luxury segment, mainly in China, had paid off handsomely, contributing the bulk of the group's revenue in the financial year ended June 30, 2021 (FY21).
"International travel restrictions had diverted spending domestically in China, towards premium and luxury items.
"This has benefitted our operations there, given our super-luxury portfolio in China for brands including BMW, Rolls-Royce and McLaren," he told the New Straits Time recently.
Basham said SD Motors remained optimistic on the outlook of the Chinese automotive market, particularly in the luxury car segment, as the luxury car sales in China were projected to increase with rising incomes stoking an appetite for luxury goods and services.
"With increased and more critical awareness towards climate change, we are seeing a big push from governments and original equipment manufacturers (OEMs), as well as demand from consumers for electric vehicles (EVs)," he said.
Basham said SD Motors would leverage on its broad portfolio of world-class brands such as BMW, Porsche, Jaguar and Hyundai, which are rolling out their EV line ups, to tap on this opportunity.
"We are also seeking out new EV OEMs to carry their products given our wide distribution channel across the Asia Pacific.
"Our high-value assembly capabilities at Inokom is a differentiator for us as our value proposition includes being an EV assembly hub for the region," he said.
Basham said EV was the new buzzword as the company was expecting many investments in this space while reiterating it was committed to being a leader in EVs.
"As the preferred dealer for over 30 marques across the Asia Pacific, we are fortunate to have an array of EV offerings from our OEMs (BMW, Porsche, Hyundai, Jaguar).
"Brands that we represent have all announced an EV pipeline of models, so we are in a good position to capitalise on the trend," he said.
Basham said assembly could be another unique value proposition for SD Motors as the company was ready to provide its partners with the capability to assemble right-hand drive products for the new EV marquees looking to enter Southeast Asia.
"We are hopeful that the Malaysian EV framework will incentivise EV assembly and retail. Our reading of the trends is that fully autonomous vehicles are some way out, but artificial intelligence features are already embedded in latest models," he said.
Meanwhile, he said Inokom Corporation Sdn Bhd was a highly strategic component within the group's automotive business portfolio, allowing it to capture the upstream value along the chain.
Inokom is Sime Darby's subsidiary operating an assembly facility in Kulim, Kedah.
"Currently, we assemble four brands in Inokom such as BMW, MINI, Hyundai and Mazda, with two more brands coming in in 2022 namely Kia and Porsche," he said.
Basham said Asia Pacific formed the backbone of SD Motors' business and would continue to be its focal point for growth.
"Our current footprint in Greater China, Australasia and Southeast Asia strikes a good balance between established and developing markets.
"Nevertheless, there are still pockets of opportunities in emerging markets such as India and Indonesia due to their large growing populations, favourable demographics and increasingly middle class. We are exploring these markets in the hopes of uncovering the next China," he said.
Basham said Malaysia contributed almost 15 per cent of SD Motors' revenue and was a crucial part of its portfolio, being the groups' home market and assembly hub for BMW, MINI, Hyundai, Mazda and most recently, Porsche.
"Fortunately, our showrooms are now allowed to open. During the lockdown period, only our after-sales facilities could operate.
"Nevertheless, we believe pent-up demand and higher maintenance needs will likely be a key theme as Malaysia emerges from the pandemic and more states move into Phase Two of the National Recovery Plan."
Basham expects growth in car sales for the financial year ending June 30, 2022 (FY22) as the economy reopens and demand for its cars pick-up, particularly with exciting new model launches such as the BMW i4 and fully-electric BMW iX in the first quarter of 2022.
Basham said SD Motors had utilised digital solutions to communicate its product and service offerings, including holding virtual launches of models and creating virtual showrooms.
"We recognise, however, that customers still require a certain level of personal touch and physical interaction, especially at the point of purchase.
"Our goal is to create a seamless omnichannel experience for the customer – from our online channels to the physical showroom experience and beyond the car buying journey, extending through to the after-sales experience as well."
Sime Darby group chief executive officer Datuk Jeffri Salim Davidson said Malaysia remained the base and a growth market for the group, despite only representing about 12 per cent of revenue contribution.
"It is home to a comprehensive value chain for our motors division encompassing retail and distribution, right up to assembly for motors.
"Malaysia is also one of the oldest Caterpillar dealerships in the world for the industrial division and home to four out of the seven hospitals that Ramsay Sime Darby Health Care owns," he said.
Jeffri said Inokom was an integral part of Sime Darby's growth strategy moving forward.
"We are working with our existing partners and are always on the lookout for new ones to expand our assembly operations," he added.