DRB-HICOM Signs J-V with Hyundai Motor

DRB-HICOM Berhad today signed a Supply Agreement and the Technical License Agreement with Korea’s Hyundai Motor whereby it will act as the assembler and distributor for Hyundai commercial vehicles.

The Supply Agreement covers the sale and purchase of Completely Knocked-Down (CKD) components from Hyundai, while the Technical License Agreement allows the franchise holder, Euro Truck & Bus Sdn Bhd (ETB) to obtain the technical information to assemble Hyundai trucks, as well as to exclusively distribute and sell the truck in Malaysia.

The 5000 kg GVW Hyundai truck model HD65 will be assembled for ETB at Malaysian Truck & Bus Sdn Bhd (MTB) facilities in Pekan, Pahang, and distributed via DRB-HICOM’s dealership network. ETB is also the sole franchise holder of IVECO commercial vehicles.

Both ETB and Hyundai view the collaboration as strategic, as it would strengthen the position of both parties with the onset of market liberalization under the ASEAN Free Trade Area (AFTA) Agreement and in future, WTO.

The new business relationship with Hyundai will be leveraged on the strength, capabilities and resources of the DRB-HICOM’s automotive division including the automotive plant complex in Pahang, its vendors and dealership network. This will provide an immediate, effective and low-cost penetration for the new Hyundai commercial vehicle make into the Malaysian market”.

This deal is very significant for ETB as it is in line with the company’s strategy to diversify its product base to meet the demand of the Malaysian commercial vehicle market, which is projected to see a strong growth over the next five years. The 5-ton truck segment is a competitive but growing market, with some 5,000 units being sold annually.

ETB is optimistic of selling around 600 units of the Hyundai HD65 in the first full year, and the projected sales are expected to generate an annual turnover of about RM40 million, with a reasonable margin from the Hyundai agreement.

Johng Sik Choi, Hyundai Motor Company Executive Vice President, Commercial Vehicles Division, said: “This Hyundai truck was introduced in 1998 and is today one of the most popular medium-duty trucks in over 70 countries due to the outstanding design, best performance and quality.”

The tie-up with Hyundai is an additional feather to DRB-HICOM’s cap, and marks a positive step forward for the Group that currently manufactures and distributes key marques in the automotive industry including Proton, Honda, Mitsubishi, Isuzu, Citroen, Modenas and TATA.

For Hyundai Motor, the link with DRB-HICOM is the Korean automakers fourth business relationship in Malaysia, each with a different party. The first one was with the Berjaya Group in the early 1990s for the import and distribution of Hyundai passenger cars. In 1998, Hyundai again teamed up with Berjaya as well as Renault to establish Inokom to make light commercial vehicles based on Hyundai and Renault models. Last year., Hyundai signed another agreement with Oriental Holdings and Hyumal for the local assembly of a few passenger car models.