Inokom MFV To Roll Out in Q4 2002

Inokom (Industri Otomotif Komersial (M) Sdn Bhd) will begin rolling out the first unit of its Hyundai Atoz-based Multi-Functional Vehicle (MFV) during the fourth quarter of this year, most likely in October.

“We have some technical issues to resolve from time to time which cause minor delays but overall, we are on track to begin delivering vehicles by October this year,” Inokom Chairman Amer Hamzah Ahmed, told AUTOWORLD.COM.MY.

The vehicle – which will have a name selected from entries submitted in a contest run by the company – will have about 20% of local content, but this will be increased as quickly as possible.

“Our Korean partners are very concerned about quality and so we are using their parts first. However, we are also working closely with many Malaysian vendors to localise parts and the extra business we are giving them should help increase their economies of scale,” said Encik Amer. “It is not our intention to seek new vendors but to use those with the experience and facilities which are under-utilised to become suppliers for our MFV. In this way, they should get better economies of scale and be able to offer their components at competitive cost.”

He revealed that, prior to the launch of the locally-assembled model, Inokom will be selling imported units through their appointed distributor.

“We expect the first shipment of what will be a total of 400 units of the new Atoz model to come in next month and will offer these to the public. We want to do this so as to create more awareness of the model among Malaysians,” he explained.

This suggests that, although the MFV will bear an Inokom badge, it will not be much different from the Hyundai-badged version. Encik Amer confirmed this, saying that there may be little local touches here and there but major styling changes will come with the next model some years down the road.

“It is a similar approach as what you see being done by Perodua with its Daihatsu-based products,” he added.

Being a low-cost entry-level model, the MFV is not going to be a model that will create long-term customer loyalty. People will naturally want to upgrade to a larger model as their incomes rise over the years. However, Encik Amer feels that the 3-prong strategy Hyundai is having for the Malaysian market will be effective in developing a long-term relationship with customers.

“As an entry level car, Hyundai has this project with Inokom and when people are ready to upgrade, they can move to the Elantra and Sonata which are locally assembled by Oriental-Hyundai, our joint-venture with the Oriental Group. And for those who have more money, we also offer a selection of CBU models at the upper end – such as the Santa Fe and the new Coupe GK,” he explained.

Emphasising that the entry of the MFV should not be seen as competition for the existing national cars, he said that it is intended to be complementary. “We will focus on slightly different areas and on the whole, we believe that the lower end of the market can be expanded somewhat with the addition of our model. This means growth for the market and that benefits everyone,” he said.

Though the project is modest in scale, there are definitely plans to become a regional supplier. Encik Amer said that Inokom is keen to be a major regional production base for Hyundai. However, there is also competition from the factories in Thailand and Indonesia for the same status.

“It’s all about the incentives which Hyundai can get in the place they invest in. If you look at why they chose Alabama for their US factory, you will see that it is because the state government offered very attractive incentives to them. So if they consider our Malaysian incentives attractive, they will increase their investments here. At the moment, they already have a small equity in Inokom,” he said.

He confirmed that Inokom’s MFV will enjoy some tax breaks of a similar level as that given to certain models of the Perodua and Proton range. This means lower duties and sales tax than what is levied on non-national makes, enabling the vehicle to be priced lower.

“This project [to produce the MFV in Malaysia] is a significant one for Inokom because we have managed to gain such a technical tie-up with a leading automaker like Hyundai Motor. They are very serious and committed to the project and at the end of the day, it will mean that we gain alternative technologies from Korea and also investment,” stressed Encik Amer.

NOTE: This report was based on an exclusive interview with Inokom’s Chairman. Strict copyright rules fully apply.