KUALA LUMPUR, Jan 28 ― Honda Malaysia is looking at the Malaysian market seriously, after putting in RM382 million into its No. 2 Line, doubling its production capacity at the Pegoh plant in Melaka from 50,000 units to 100,000 units per annum. Daily production is up from 200 units to 400 units.
Covering an area of 49,190 square metres, the new line took just under a year to complete, and this year marks Honda’s eleventh year at the Pegoh Plant located just outside of Alor Gajah, which rolled out its first car in January 2003.
With this bold move, Honda is geared to take on its main competitor, Toyota head on, and the planned capacity comes as no surprise as Toyota has been selling between 80,000 to 100,000 cars in the last five years, with last year’s sale being 92,000 units. Elsewhere, the Malaysian market is expected to hit in excess of 600,000 units for 2013 (official MAA numbers as at November 2013 is 548,420 units). A target of 100,000 units represents between 15 to 16 per cent of the total market, which sounds reasonable and achievable. Honda Malaysia’s sales have been steadily growing, and most of its models are on a “waiting list” basis. By just being able to respond to customer orders in a shorter time, sales will improve.
The 2012 floods in Thailand, which had a crippling effect on Honda Malaysia’s sales, reducing it to 34,000 units is a bitter lesson learnt, and expanding production capacity here in Malaysia is a logical move. It also means the creation of more employment for Malaysians. Honda also plans to introduce some new models, particularly the smaller models, and increase the number of hybrids in the near future to expand its reach. Currently Honda Malaysia assembles the City, Civic, CR-V, Accord and both the Jazz Petrol and Hybrid variants at its Pegoh Plant. To date, more than 22,000 units of hybrid Hondas have hit the Malaysian market.
The historic ceremony was graced by guests-of-honour, Dato’ Sri Mustapa bin Mohamed, Minister of International Trade and Industry (MITI); Datuk Wira Hj Md Yunos bin Husin, representing the Malacca State Government; Ambassador of Japan to Malaysia, His Excellency Mr. Shigeru Nakamura; and Mr. Hiroshi Kobayashi, President and Chief Executive Officer of Asian Honda Motor Co., Ltd.
Mr. Kobayashi expressed his delight with the opening of the No. 2 Line in Malaysia. “Malaysia plays an important role for Honda. We have been operating in Malaysia for more than 10 years and I am proud to note that our business has grown rapidly over these years. With a customer-oriented approach in mind, Honda has continued our investment, growth and expansion in Malaysia by leveraging our unique technologies, ideas and ingenuity to create products that meet the customer’s needs.”
“Honda looks to further develop our local production in Malaysia by taking a more strategic approach to the industry. By developing skilled local capabilities and implementing advanced manufacturing technologies in this attractive and important market, we are positive that Malaysia will help achieve the long-term growth of the Honda brand. Honda remains firm in its commitment to provide good products with speed, affordability and low CO2 emissions to meet the growing market.”
Speaking at the opening ceremony, Mr. Yoichiro Ueno, Managing Director and Chief Executive Officer of Honda Malaysia thanked the Malaysian government for the support to the automotive industry. “The automotive industry in Malaysia has shown rapid growth in the past 5 years and we are grateful to the government for the continuous support to the industry, especially in promoting energy efficient vehicles.”
“We have set our mid-term plan to make additional investments of RM1 billion in 3 years starting in 2012, to the manufacturing and sales network. The total investment for the No. 2 Line of RM382 million covers the cost of building, equipment and facilities. This investment is crucial in strengthening our operations in order to meet our mid-term goal of achieving 100,000 units sales by 2016.”
Honda has enhanced its overall operations in Malaysia in the past couple of years with a new parts warehouse, new test track facility, new Pre-Delivery Inspection (PDI) Centre and recently, changing its logistic to rail in order to be more efficient.
At the new No. 2 Line, Honda introduced a number of new technologies in order to achieve a high level of standard. Installed are automated Smart Welding Machine and state-of-the-art painting facility including Spray Robots and Under Body Coating. These new technologies will improve the accuracy of the body and the quality of the body paint and coating thickness. The Multi Driving Tester for Vehicle Quality is also enhanced to ensure it is hybrid-compatible to check on the IMA system and battery condition. The expansion opens up more job opportunities for locals and Honda Malaysia expects to employ 700 new associates who will be equipped via the necessary skills training to handle the advanced machineries at the plant.
Mr. Ueno continued, “In order to achieve more affordable prices for Malaysian customers, Honda Malaysia is targeting to enhance the localization of the component parts from the previous 30-40 per cent to over 70 per cent in the near future. This can be achieved with a combination of hard work of our associates to implement advanced technologies and the expansion of component suppliers.”
The Green Factory concept is actively pursued at the Pegoh Plant; high efficiency equipment has been installed and lean processes are put in place to lower power consumption. Numerous green initiatives such as “recycle and reuse energy” and water efficiency were implemented in the buildings and equipment. These efforts support Honda’s global environment target of reducing CO2 emissions by 30 percent by 2020.
Both No. 1 and No. 2 Lines are capable of producing multiple models by efficiently shifting production. To support this enhanced quality and increased production of vehicles, Honda Malaysia is striving to provide the best customer service through an enlarged network of dealers, by targeting to have 90 dealers by the end of 2015.
“Honda Malaysia will continue to produce high quality products to meet Malaysian market demands. We are committed to the Malaysian market and the growth of the automotive industry. Honda has a strong presence in this country due to the continuous support from the government and our customers. We are committed to meet customers’ expectations by producing innovative products while supporting the development of local automotive industry. The No. 2 Line will enable Honda to provide more joy to our customers in Malaysia,” Mr. Ueno said.
