KUALA LUMPUR: The expansion of Porsche's local assembly is a strong signal of Malaysia's rising significance as a manufacturing hub for high-tech automotive products especially electric vehicles (EVs), according to industry experts.
They believe this is a pivotal moment for Malaysia as the country needs to demonstrate its capability to handle premium brands like Porsche.
Porsche and local partner Sime Darby Bhd on July 24 announced the expansion of the German marque's assembly facility in Malaysia, its first outside Europe.
The Inokom facility in Kulim, Kedah has been expanded to 11,000 square metres to facilitate the local production of a second Porsche Cayenne variant.
Sime Darby and Porsche rolled out the plug-in Cayenne S E-Hybrid Coupé, and disclosed that the new variant would be the first locally-assembled Porsche to be exported to the Thailand market.
Premium brands a boost to Malaysia's reputation
Automotive analyst Shamsul Yunos said although the initial stage may have limited opportunities for local content, any new jobs created by the project are beneficial. This is because it provides the local workforce with the chance to gain experience with high-end premium products.
"Malaysia has always faced challenges when exporting. Porsche's announcement that they are exporting the cars made in Kulim to Thailand is highly appreciated as these are high value products," he said.
Shamsul added that Malaysia is gaining attention as a potential global hub for semiconductors, and hosting a high-end brand can only bolster the country's reputation as a centre for high-tech manufacturing.
"Sime Darby is also a regional player in the automotive industry, deepening their relationship with a major luxury brand can play well for them and give them a stronger footing throughout their existing markets.
"The Volkswagen group is already a major investor in Malaysia and with Audi also mulling the possibility of making their completely knocked down (CKD) move, this decision by Porsche can only be a positive nudge for them, if they have big plans for the Malaysian and Asean market," he said.
Next phase for Sime Darby
Another analyst Hezeri Samsuri said this marks the next phase for Sime Darby, as it could lead to Porsche and other brands establishing more facilities in Malaysia such as a regional training centre, and attracting more high-end component suppliers.
He noted that premium car companies rarely disclose their parts sources, but combining this opportunity with Malaysia's expertise in microchip production could be a good beginning.
"Some countries offer better incentives if local parts or components are used and made known to the public.
"We can do that too and when this is known, Malaysia will be in a better position to market itself to other manufacturers, not only automotive but other products as well. This will create more opportunities for high skill jobs," he said.
The Porsche CKD expansion is a positive development, Hezeri added, as it helps shift the country's image away from being known solely for cheap labour.
On the potential impact of this expansion on attracting further investments from other brands, Hezeri said market confidence is crucial.
"The government should have solid long-term incentives and plans to support this growth.
"Porsche is the beginning and we should not stop there and gloat. Investors want to know the outcome and therefore updates on this should always be provided by the government.
"We had premium cars assembled here before but not much news has been made known after the initial launch. At one time, we even had Mercedes Benz assembling engines here in Pekan. We now have Volvo too assembling and exporting cars," he explained.
Hezeri emphasised that it is crucial to provide updates on such activities to avoid being seen as a country that launches many initiatives but then lets them fizzle out.
Porsche's holistic approach for regional expension
In a written response to Cars Bikes & Trucks, Porsche Asia Pacific chief executive officer Hannes Ruoff said it could not disclose specific figures for the expansion.
He said Sime Darby has invested in the project's establishment, while Porsche has supported the investment through technical upskilling, engineering expertise, and supply chain optimisation.
He also noted that the expanded plant is entirely staffed by a local workforce.
Ruoff explained that the choice of Thailand as the first export market for the Porsche Cayenne S E-Hybrid Coupé was influenced by the company's holistic approach to expanding its presence in the region.
"The decision to export the Malaysian-assembled Cayenne S E-Hybrid Coupe to Thailand was a result of many factors, for example a strong understanding of Thai customers' preference for the Coupe body shape and their desire for increased performance.
"Thailand is a very important market for Porsche in the diverse and exciting Southeast Asian region, and our goal is to further develop its vibrant community of customers and fans with this elevated offer."
He said currently, only the Cayenne model line is being assembled in Malaysia, both for the local market and for export to Thailand.
"There are no plans to have any other Porsche model line assembled outside of their current locations in Europe and for now, Thailand remains the only market Porsche is exporting to, within the Southeast Asian region," he said.
Sime Darby Motors managing director Andrew Basham said the expansion strengthens the company's leading role as a strategic partner throughout the value chain, encompassing importation, retail and local assembly.
He added that the longstanding and trusted partnership between Sime Darby and Porsche, developed over more than a decade, reflects a mutual desire to accelerate growth and expansion in the Asia Pacific region.