EON Subsidiary to Sell Audi and VW
The Volkswagen Group has appointed a new importer/distributor for its Audi and VW brands in Malaysia. The new company, Euromobil Sdn Bhd, signed Letters of Intent and Acceptance with Audi AG and VW AG at Putrajaya in the presence of the Deputy Prime Minister this morning.
Euromobil is a subsidiary of Edaran Otomobil Nasional which was established in October this year exclusively for the purpose of handling the two German makes. It will officially commence business on January 1 2003 but sales operations will only begin in March 2003. Around the middle of the year, the company’s new showroom and service centre near Shah Alam, Selangor, will be completed.
“To show our commitment to these two new businesses, we have already purchased two pieces of land totaling 5.5 acres in the Glenmarie estate, not far from our EON head office complex, for the purpose of building a new showroom and service centre,” said Tan Sri Dato’ Seri Mohd Saleh Sulong, Chairman of EON. “And with the initial investment of RM40 million for this exercise, I think one cannot be much more committed than this.”
He added that before the new premises are completed, sales will be handled from the EON showroom at the head office complex. Additional showrooms and service centres will also be set up in Kuala Lumpur, Penang and Johor Bahru in due course.
Due to the limited volumes, local assembly is not envisaged in the immediate future although EON’s parent company, the DRB-HICOM Group, would very much like to assemble the German cars at its manufacturing complex in Pekan, Pahang. Thus, for the foreseeable future, only Completely Built-Up (CBU) models will be offered.
“Euromobil will offer the entire Audi range but focus on the A4, A6 and TT Roadster/Coupe. For the VW brand, the models available will be the Golf, Bora, Passat and New Beetle,” revealed Tan Sri Dato’ Seri Mohd Saleh. “The company will also cater for specially-ordered models of both brands,” he added, forecasting around 30 units a month for total Vw and Audi sales in the short-term.
The EON Chairman said that Euromobil will spend the next few years working hard on establishing an effective network, emphasizing on brand awareness and product image, and engaging in many customer-relationship activities.
Speaking on behalf of the VW Group, Markus Schrick, Executive Director (Sales & Marketing, Asia) of Audi AG said: “EON’s mission is “Driving Customer Service Excellence” and we believe this is exactly the right mission in today’s competitive environment. With EON’s excellent track record in marketing, sales and after-sales service and support, we are confident that this partnership will bring long-term success for both parties.”
Mr Schrick said that the distributorship agreement has no specific term and that both VW and Audi were taking a ‘long-term view’ to developing their relationship with Euromobil, and to increase their market share. He pointed to the success that VW/Audi had achieved in China after many years of building up the brand image there and said that the same approach would be taken in Malaysia.
EON’s association with the two German makes is not its first ‘non-national’ business as it is already selling the TD2000 classic sportscar as well as the Hicom Perkasa (in East Malaysia). However, it suggests that the issue of not dealing with any other makes is no longer a key one in the yet-unsigned distributorship agreement with Proton.
“I would not say that Proton is happy nor overjoyed [with this development] but it should be noted that we proceeded only after getting consent from Prime Minister Dato’ Seri Dr Mahathir Mohamad, who is the Patron of the National Car Project. It was conditional to setting up a separate company to handle the new makes,” revealed Tan Sri Dato’ Seri Mohd Saleh.
He added that this new association with Audi and VW was not expected to be an issue with Proton and that the signing of the distributorship agreement is “advanced” and will be settled in due course.
While the Audi distributorship will be exclusively handled by Euromobil from January 1 2003, VW importation and distribution will be handled by both Euromobil and Auto Dunia in 2003.
“We will still be importing and distributing VW models in 2003 as our agreement with VW AG provides for this. Thus we will be looking into some new models to offer the public next year,” Tan Chee Keong, Executive Director of Auto Dunia, told AUTOWORLD.COM.MY.
Mr Tan said that all customers of Auto Dunia can be assured of continued service for their Audi vehicles even after the company ceases to be the franchise holder for Audi in Malaysia. “Our service centres in Petaling Jaya and Batu Caves in Selangor, Johore Bahru and Penang, will continue to provide the necessary service and spares,” Mr Tan said.
As to future plans, Mr Tan said that, following a reorganization of the company, there will be a review of business plans with a view towards new business opportunities.
The appointment of Euromobil for the VW and Audi brands is only the third time both German makes have appointed a distributor in Malaysia. VWs made their first appearance with the Beetle in the 1950s when Champion Motors began importing them and the first showroom was in Sungei Besi, Kuala Lumpur.
When the Inchcape Group, which Champion Motors was part of, built an assembly plant in Shah Alam, Selangor, in 1967, local assembly of the Beetle commenced and continued well into the late 1970s. Champion Motors also had the Audi franchise and sold imported as well as locally-assembled models.
In 1985, Inchcape decided to pull out of the motor business in Malaysia and Champion Motors thus ceased activities. The franchises for both German makes were then acquired by Auto Dunia, a new company set up as a private business venture by the Tan Chong families. The Malaysian national car had just started and perhaps they felt that with the Nissan dominance ended, having a second line of business would be a good idea.
Auto Dunia focused on Audi when it started and that was a pretty good time as the Quattro was all-powerful in the World Rally Championship in the 1980s. In fact, it is a little known fact that one unit of the 80 Quattro (a black one) was assembled even locally. Even though volumes were nothing like those of the Nissan Sunny, Auto Dunia could still have Audis assembled locally as the Tan Chong Group had its own assembly plant in Segambut, Kuala Lumpur.
When Auto Dunia took over, the Audi image had lost its lustre and it is to the company’s credit that it came up with innovative programs to improve the image. The company boosted customer confidence with an innovative “Buy Back Program” that offered guaranteed values for trade-ins after a few years. But because it had effectively improved market confidence in Audi, used values rose quickly and few customers invoked the “Buy Back” promise when they bought new Audis later on.
As Audi products got better and their engineering grew in superiority, the popularity grew and the image also got more polished.
The VW brand received less attention, mainly because of pricing. Though there were many appealing products, especially the Golf GTI, the retail prices could not be made attractive enough for Malaysia customers and it is only in recent years that the company has begun to offer models like the Bora, Golf and New Beetle at attractive prices. This perhaps marked a change in thinking in Wolfsburg where it seemed that “German engineering” meant that prices could be higher without considering the market environment.
