Tuesday, August 18, 2009

Riding over advertisy.

IT'S ALWAYS A TIME OF CRISIS at Perusahaan Otomobil Kedua Sdn Bhd (Perodua). And they wouldn't have it any other way.

`It's an internal philosophy,' says Perodua managing director Datuk Syed Hafiz Syed Abu Bakar. `We must have the sense of crisis moving forward.'

The country's second automaker has made great strides over the years. It had capitalised on the low-end compact car segment and, in 2006, dethroned its big brother Proton as the leading automaker in the country.

Both its reputation and sales are on the upward trend. Its strategic tie-up with Toyota, acclaimed as one of the world's best automakers, ensures it a bright future.

So why the sense of crisis?

`We want to keep the car prices low but our cost is increasing everyday. Three years ago we had what we call Vision 333. One of the `3s' is the 30% market share, which we achieved in 2006 and became No.1 since then.

`But the second `3', to reduce costs by 30%, is an ever-moving target! By the time we are halfway there, the forex hits us; so we regroup and move forward again. Then by the time we get three- quarters of the way, fuel prices go up, affecting among others plastic and rubber parts. Unless we operate with a sense of crisis, there is no way we can meet the challenges,' he explains.

The number `3' seems pretty significant to Syed Hafiz (even his car plate is numbered `333') and Perodua: last year's market share was 33.3%; its bestselling model Myvi was birthed from a three-way Toyota-Daihatsu- Perodua partnership; Myvi's current stockholding is three days; some 30,000 units of vehicles it produces are as a contract manufacturer.

And of course, this: `We must stay as market leader for at least three years to raise public perception and second-hand car value of Perodua cars,' Syed Hafiz says.

Perodua's first car, the minuscule Kancil, was a hit and still relatively popular. However, it had a non-flattering image: Small equals cheap and low quality, as Syed Hafiz puts it.

Changing perceptions with the Myvi

All that has changed, though. Public perception of Perodua, as well as its consumer base, radically improved with the launch of the Myvi in 2005.

`Before Myvi, 70% of our customers were Malays, probably below 32 years old. Since Myvi, 51% of the buyers are non-Malays and 51% are ladies. About 35% of Myvi owners belong to the more than RM40,000 (annual household income) bracket. It brought a different perspective to us,' Syed Hafiz exclaims.

Finance companies, too, `are fighting to finance Myvi buyers', for the simple reason that the non-performing loan (NPL) ratio of Myvi owners is less than 1%, comparable to Toyota owners.

When the Viva was launched last year, the expectation was that it would be another Myvi. `There is always the challenge post-Myvi to keep up the tempo and bring something similar, along those lines,' Syed Hafiz says.

Indeed, the Myvi has been the top-selling car model in the country last year and so far this year, while the Viva was second last year and still enjoying good sales.

How about competition with the other national carmaker Proton? Syed Hafiz says Perodua's attitude is to beat its own best, not compare itself with others.

`It is not important to be first or second. We want people to buy our cars because they want to, not because we are the cheapest. If we are number one in sales but not in the hearts and minds of the consumers, they will go elsewhere as soon as a cheaper alternative comes by. The public's perception of us must change and that has to begin internally,' he says emphatically.

Eyebrows were raised when Perodua launched the Nautica four- wheel-drive (4WD) in early May. Coming at a price tag of RM89,900, it was certainly way above the normal Perodua range. One could buy three Kancils with that kind of money. Is Perodua going high-end?

Syed Hafiz says the Nautica is just to fill the void in the line- up; having just the Myvi and Viva in the showrooms was somehow `lonely'.

`We have the small Kancil, the new Viva, and a mid-sized family car, Myvi. We needed something to replace the Kembara (an earlier 4WD model). The Nautica is not something that is supposed to sell like hot cakes. I'm hoping for 100-150 a month. I'm not going to push for more,' he says.

The second, and perhaps more pertinent reason, is to test the market. `With market liberalisation, I wanted to do a test: if I put the Perodua badge on a RM90,000 car when the public's perception is that we are "small, cheap and plenty", can the brand take the RM90,000 price tag?' he queries.

`If we had brought in the Nautica before the Myvi, people might have laughed at us! But since the Myvi, the public's perception of Perodua has changed a lot,' he says.

The Nautica is also Perodua's first 1.5-litre vehicle. `This is the first opportunity for our service boys to handle 1.5-litre engines,' he quips.

Incidentally, the Nautica is made and fully assembled in Japan, which may account for its higher price. It is a Perodua-badged version of the short-wheelbase Daihatsu Terios/Toyota Rush.