PERODUA was established in 1993, is a joint venture company between Malaysian and Japanese partners. PERODUA is the one of the top company in the automotive industry in Malaysia.

1. Competitors

Perodua has in fact only a few competitors in Malaysia. Proton savvy is the major

competitor nowadays because it is the most fuel-efficient car available in Malaysia.

Each kilometer consumes only 8sen. Savvy cost between RM 33549 and RM 43182

with a 1200cc engine. Proton's mission is to provide affordable car to customer and

they focus on being the first choice of automobile products and services. However, its

original mission was spoilt after the economic recession of 1987 when the Yen got

stronger and Japanese parts cost more.

Naza sutera is also another compact car with price range of RM35988 to RM39988

and 1100cc engine. Although it has a similar pricing strategy and technology with

Perodua, Naza Sutera had lost in terms of design which is the major factor that attracts

youngster in their buying decisions. Naza Kia objective is the commitment towards

building an efficient after sales network and achieve customer satisfaction through

quality, versality, and affordability.

Toyota Yaris is one of famous compact car due to its famous brand with reliable

performance and experience, safety features, modern design. Yaris equipped with a

1497cc engine and cost between RM52789 and RM100408 each. Some consumers

may not be able to afford the price because import cars have higher price and tax

amount than local brand. Toyota mission is moving forward because they believe

there's no best, but only being better through the passion for innovation and discovery.

Suzuki Swift is equipped with a 1490cc engine and cost around RM84146.50. Swift is

a compact car with modern design and good safety features that focus on passengers

comfortable. It consumes more fuel than Perodua's products since it have relatively

higher weight. Swift is more suitable in targeting middle and upper class consumers.

Suzuki's mission is to promote better living conditions and satisfy people's needs

through creativity and provides ‘value- packed' products.

Honda Jazz is an extra low fuel-consumption car with its 1497cc VTEC engine. It

offers sporty looks and more space than any same level cars. Jazz cost around RM

103780 that caused it less competing than Perodua. Honda's mission is to be the

leader in motoring industy. They aimed for being recognized internationally by

winning awards worldwide.

Honda and Toyota has relatively high market share due to its famous brand,

reputations, and reliable performance and high technology. Suzuki has lower market

share than Honda and Toyota. Naza Kia have higher market share than Perodua.

Although Perodua have the lowest market share, it owns a great potential in future

market, both nationwide and international as fuel and material price are increasing in

the future.

Figure shows the position of Perodua against its competitors in Malaysia.

Target Market

Perodua’s target market is the consumers under generation-Y, who are under the age

of 20 years old to 34 years old. This is because these consumers will have the

outgoing personality and more active. They will seek for the mini car which looks

sportier and affordable for the beginning of their life journey.

Perodua also target the consumers who are under working and middle class because

the company's products are well known in selling the economic cars. Perodua's

product is focus on quality, economic and a good service which meet most of the

consumer's satisfaction.

Market Positioning

Perodua successfully position their brand names and brand's unique benefits in the

mind of the consumers which the company produce economic, mini and compact

vehicles. Therefore, consumer will have a good perception towards the Perodua

products because of the company's performance, quality and pricing. They have a

good and strong positioning strategy among for each segment as they can differentiate

their marketing offer compare to the competitors. This can be proved by the Perodua's

vehicle are selling in a lower price, fuel efficient, sporty design, world wide quality

recognitions which is from the ISO and last but not least, it is comfortable.

2. Strategy to its competitors

Basically, it is obvious that Perodua is using the focused cost leadership strategy. This

is because Perodua is well known for its affordable and mini compact cars. It is

focused cost leadership because its market is targeting on those who prefer these mini

compact cars. Perodua did not produce big cars. Below are the details of the strategies

of Perodua towards its competitors in detail.

Local competitor: Proton

Perodua’s main competitor, Proton company, is the local leader of Malaysia in the

automobile industry, same as Perodua.

Previously, Perodua’s strategy was to corporate with Proton at the beginning. Perodua

gain its automobile market share of Proton in Malaysia by focusing on automobile

with low emission volume which displacement is between 600cc to 1300cc. Examples

are Myvi and Kancil. Due to the increasingly high price of patrol and the enhanced of

environmental-friendly awareness among people, Perodua’s economical, small and

compact cars are becoming more and more popular in Malaysia market. However,

Perodua company’s intension to merge with Proton ended in failure because both

parties’ management disagree with each other, Malaysian government said it won't

force two firms.

National car cannot always be dependent on the domestic market, it is necessary to

explore international market. So Perodua sought for oversea alliance to support its

technology to compete with Proton. Perodua is now controlled and very competently

run by Japan's Daihatsu, part of Toyota.

Now Perodua’s strategy is to pursue cheaper green technologies with its technological

partner Daihatsu to produce affordable plus environmental-friendly compact cars and

stay ahead of its competitors.

International competitors

Perodua is not just having local competitor such as Proton, the main competitors for

national vehicles are renowned brands such as Toyota, Honda and Nissan. Other than

their attractive prices, these vehicles have also won the hearts of consumers through

their innovative and sophisticated models.

The first strategy for Perodua to compete with them is pricing. This is done under the

protections of government’s support, which is to impose high import and excise duties

on non-national vehicles, with the aim to decrease the number of imported non-

national cars. The price of Perodua was 20 to 30 per cent cheaper than similar

capacity cars manufactured by other assemblers. Therefore, people who under low-

middle income are more willing to buy the local cars compare to the international car.

For a well-established brand, they can only remain its image built in the eyes of its

constituencies whereas the local economic kind of cars is their final decision to

purchase because it requires lower in cost as well as for repairing purposes.

Perodua's is also using the Research and Development investment strategy which

focused on enhancing their capabilities in automotive technology, such as testing,

design, and modeling to the final manufacturing engineering technology and

operation. Perodua also formed an alliance with the Japanese Development

Corporation, and Italy's Stole companies to provide them with the key technical

support. At the same time Perodua choose to export more for future ways since

Perodua cannot rely on temporary benefit in the domestic market. Therefore, the

export market will play a more important role over the next five years.

3. Retail Mix

Price

The PERODUA concept is based on relatively affordable standardize price.

PERODUA sells variant of vehicle with an indication of price not exceed of RM

60,000 to maintain the affordability, but yet delivering quality and style at the same

time.

The price of the vehicle may change due but not limited to change in government

approved net selling price, standard accessories prices, duties and taxes and freight

rates etc. The cost of this increase shall be included into the net price.

Place

PERODUA has 39 sales branches and 140 sales dealers nationwide to serve its

customers efficiently. It also has 41 service branches and 120 service outlets

throughout Malaysia for customers’ convenience. PERODUA vehicles are sold in

countries such as the UK, Singapore. In addition, PERODUA also exports their cars to

Mauritius, Brunei, Sri Lanka, Cyprus, Malta, Egypt, Nigeria, Senegal, Lebanon,

Qatar, Saudi Arabia, Syria, Nepal and Fiji in small numbers by local dealers.

Product

The PERODUA brand is identical with quality, affordability and fun-to-drive cars,

since PERODUA started in Malaysia, its target market is mainly the local consumer,

but also targeting new emerging international market, for instance; Indonesia.

PERODUA produce mini cars that are targeting to those middle-income families.

Hence, the three strong models can show this: Myvi, Viva and Alzaare produced by

PERODUA.

Myvi has launched on 25 May 2005 that hit the big start by receiving the

AutocarAsean‘s Car of The Year 2005/2006 Award, with such a high demand to

continue improving on its existing models, then the following next year PERODUA

launched the special edition of Myvi at the same time maintaining to launched the

new car, which is Viva, and both get the the Best Model of the Year (Malaysia) Award

at the Frost & Sullivan 2007 Asean Automotive Awards and Best Value for Money

Model of the Year (Malaysia) at Frost & Sullivan Asean Automotive 2008 Awards.

And by the end of the year 2009, PERODUA launched Alza. The latest news is that

PERODUA plans to launch a new multi-purpose vehicle (MPV) model with an

indication price of RM65,000 and below.

Promotion

PERODUA promotional efforts are mainly through its brochure, showroom, the

PERODUA sites, and promotional campaigns that add value to the consumer. For

instance;PERODUA provide the latest service centre with body repair and paint

services at the nearest convenient place. The service package is charged at highly

affordable price with the quality of services to keep your vehicle safe and in tip-top

condition. The value added as PERODUA also provide the key drop boxes to store

your keys and the complete form, imagine how relief and peace of mind if your car

broke down or if there is any kind of accident. More promotions such as customer

satisfaction survey lucky draw, GPS navigator upgrade, and express part delivery.

4. Bases of Competitive Advantage

PERODUA is a leading automotive manufacturer in the local automotive industry,

with aspirations of becoming a global organization. PERODUA as Malaysia top car

manufacturer, company had achieved a top 10 ranking at the Malaysia's automobile

market. The bases of competitive advantage of Perodua are discussed below.

a) Customer Satisfaction and Loyalty

Marketing and Pricing strategy

The competition between domestic car industry and foreign car industry became

fiercer, in order to continue survivor in the market, PERODUA must possess

aggressive attitude in developing its sales and marketing strategy effectively. A good

marketing strategy can be regards as a good weapon for PERODUA to gain

sustainable competitive advantage in Malaysia automobile market. The main mission

of PERODUA’s marketing concept is focus on lower income groups, students and

second car owner market. This precise target lead PERODUA’s sale to the highest in

the local market and that is the main reason why PERODUA automobile industry

produces a car with lower HP and sales at the cheaper prices in market.

E-marketing

PERODUA move toward to connecting all branches, dealer, customer and banks to

facilitate electronic marketing. The benefit of electronic marketing enables to

accelerate business transaction process between seller and buyer and integrate all

marketing related activities. Through the intelligence computer online system, the

customer can enjoy a lot of conveniences in this online service such as place an order,

delivery, online banking, user guideline, vehicle information( colour , brand, engine

etc.), after sales service and so on.

Campaign & Promotion

Besides, Perodua is also keeping in touch with their customers by organizing some

campaign and promotions. These activities not only enhance their customer

relationship but also to attract new customers.

b) Reliable and Economical

Localization Activities

The manufacturing capabilities of PERODUA and local Malaysian component

manufacturers have resulted in achieving 75 LMCP (Local material component

points) in the manufacturing of the Kancil i.e. an optimal level for localization given

economies of scale requirements.

In-house localization

Press Parts

Engine Parts (intake manifold, cylinder head, camshaft, crankshaft,

cylinderblock)

Third party vendors, SMI (metal, plastic, electrical, rubber, sub-assembly,

others)

Joint venture operations

c) Reputation and Recognition

PERODUA has received the Innovative Leadership Award in Globalization from the

Malaysian Institute of Directors. The award is in recognition of his outstanding

leadership in building PERODUA into a global brand and also the success the

company achieved in the past 18 years.

Perodua is recognized internationally. Perodua exports under its Perodua brand to

seven countries, namely Sri Lanka, United Kingdom, Singapore, Brunei, Mauritius,

Fiji and Nepal.

5. SWOT Analysis

Strength

Perodua is the low cost leader in Asia. With the help of Perodua’s own industry,

Perodua has successfully created a “low-cost automotive mentality” among their

workforce. The workforce is very flexible and high committed and very critical in

making Perodua the lowest cost automotive in Asia.

Perodua’s brand name is well established in Asia Pacific. Besides the normal print

media advertising and promotions, Perodua’s top management also capitalized on

promotion throughs news by being very “media-friendly” and freely sharing the latest

information on Perodua as well as the automotive industry. These rationalization

initiative enabled Perodua together with vendors and dealers to deliver improved

quality of service and be more competitive.

Weaknesses

Over dependence on the domestic market and a weak brand image in the international

market are the weaknesses of Perodua. Perodua can no longer depend on Government

support for their survival and growth. Perodua also need to lower their dependence on

foreign partners by speeding up their localization programme. This is essential to

reduce cost and be competitive when trade barriers fall. Perodua model range is too

small and also needs to get it listed as soon as possible. Perodua entering with small

car which some of the product is low quality compare to others.

Opportunity

Perodua is expecting a record year in sales, anticipate investing RM1bil in the next

few years on newer models and a plant upgrade to compete in a more liberalized

automotive business in Malaysia. Managing director Aminar Rashid Salleh said the

company was re-evaluating to expand the current strategy of having just three models

at any one time and was seeking to lower costs and have more fuel-efficient engines

to deal with competition from other smaller cars in the future.

Besides, Perodua also plan to expand its operations in China for growth prospects.

The company has rolled out as one of the largest Malaysian car making company.

With the evolving trends of internationalization, the company plans to expand its

operations in China. As the company diversifies its network by analyzing the current

cultural environment of China based on demographic trends, language, culture, ethics,

morality and other cultural differences in between Malaysia and China.

Threat

The economic recession will be a big threat for Perodua. As we know, all big

company will facing over budget or does not achieve the sale for that year. The

government will lose a lot of money cause of policy and shareholders. By the way,

economic down turn actually come suddenly without notice. Substitutes also will be a

big threat for Perodua. Malaysia has to national car. The first automotive is Proton and

secondly Perodua. The substitutes will high in term of car model (some of car model

looks similar), and car spare part.

6. Recommendation

Perodua’s Managing Director, Aminar(2012) said Perodua planned to increase its

export to the countries it was currently exporting and also expand its export market to

other right-hand-drive countries. The country which is not yet entered by Perodua is

India. Perodua should enter into India, given the huge domestic demand and a well-

established infrastructure.

Competition has become fierce in Indian automotive industry, especially entry level

compact cars. Perodua should enter India through a joint venture with a partner

primarily to benefit from the distribution network and local knowledge of the Indian

market conditions. Regarding place of entry, Tamil Nadu was found the most

attractive. Ultimately, Perodua should look at long term plans of manufacturing in

India. Many of the big auto manufacturers of the World have are already in India.

Maruti Udyog Ltd., a joint venture between the Indian Government and Suzuki, is the

biggest potential competitor, offering the maximum models in different segments.

MUL has been the leader in the Indian car market for two decades. It is necessary for

Perodua to adapt their marketing mix including product specifications, to the Indian

conditions by making necessary modifications. Perodua should follow a competitive

pricing strategy as they are new entrants to the market.

Perodua also needs active and selective industrial policies when facing a downward

business cycle threatens which can destruct core capacities and competences of

Perodua in India. These policies can include stimulation of demand, upgrading of the

workforces of OEMs and their upstream and downstream value chains, and initiation

of long-term innovation projects mobilizing significant stakeholders. Domestic (and

regionally coordinated) demand expansion (DDE) policy should take priority over ISI

and EOI policies considering the uneven global automotive structure and trade.

Perodua also need to respond with traditional crisis management measures in India by

initiating upgrading exercises for product, process, functional, organizational and

eventual ‘value chain’ diversification. Hence, in the future managements should

improve competitiveness and pro-actively prepare the next business cycle of boom

and burst through upgrading programs and financial consolidations with active

support of central and local governments and in collaboration with key civil

stakeholders.

Besides, Perodua is active in research and development, to be competitive in the

India’s automotive market, Perodua need to develop more highly unique vehicles

matching the culture and climate of India.

Lastly, Perodua need to strive to strengthen its management base, set up a team to

look at the marketability and to undertake a feasibility study of the new areas as well

as selecting dealers and distributors. Most importantly, Perodua need to enhance the

quality of its vehicles, push ahead with reform efforts to let it embrace a low-cost

structure and also expand exports.

Reference

1. Daihatsu Motor Co. Ltd (2010). Annual Report 2011. In Review of

Operation:Malaysia(12). Retrieved March 6, 2012 from

http://www.daihatsu.com/ir/library/pdf/annual11.pdf

2. Peter Wad & Nobuya Haraguchi (2010). Impact of the Global Economic and

Financial Crisis over the Automotive Industry in Developing Countries.

Retrieved March 6, 2012 from

http://www.unido.org/fileadmin/user_media/Publications/RSF_DPR/WP1620

09_Ebook.pdf

3. Dilip Singh Mutum, Entry of Proton and Perodua into the Indian Passenger

Car Market: Study from the Marketing Perspective. Retrieved March 7, 2012

from http://www.oocities.org/dsmutum/Research/carcos.html

4. Jagdev Singh Sidhu & (October 11, 2010). The Star Business. In Impact of the

Global Economic and Financial Crisis over Perodua wants to rev up, looking

at newer models and plant upgrade. Retrieved March 6, 2012 from

http://biz.thestar.com.my/news/story.asp?sec=business&file=/2010/10/11/

business/7189026

5. Perusahaan Otomobil Kedua Sdn Bhd, Perodua Official Website. Retrieved

March 3, 2012 from http://www.perodua.com.my/