Volvo makes Malaysia into ASEAN manufacturing hub

Volvo is making Malaysia into its ASEAN manufacturing hub, reports the Nation, having chosen to operate outside Thailand and consolidated its ASEAN operations to a single location in Malaysia. "We've had quite some challenging years, especially until 2009, due to low volumes. We also questioned whether we should continue or not. We then decided to sell our Thailand plant and left there last year to consolidate all our volumes here in Malaysia, which is a good decision for us. Now we have proper [sales] volumes to survive," said David Stenstrom, managing director of Swedish Motor Assemblies (SMA), under which Volvo operates in Malaysia.

Significance: The latest development will increase Volvo's local production in Malaysia. SMA currently assembles Volvo cars on a semi-knocked-down (SKD) basis with car bodies fully imported from Europe and thereafter assembled locally. Now the Volvo cars will be sold as completely knocked-down (CKD) units, after it automates its assembly line and use more advanced technology. Volvo had previously operated out of both Malaysia and Thailand and is now focused on scaling up assembly production in Malaysia. The automaker is quite optimistic about vehicle demand in Malaysia in the coming future. It expects to produce 2,200 units this year in Malaysia, Thailand and Indonesia, and the latter could be a good contributor moving forward. For 2013, the target is 3,000 units per year, by 2015, 4,500 units annularly. The company's assembly plant in Malaysia has a maximum annual capacity of 10,000 units in two shifts per day. Earlier this year, Volvo Car Malaysia and UMW Toyota Motor Sdn Bhd, a Toyota distributor in Malaysia, announced plans to sell more cars in the Malaysian automotive market this year, boosted by the introduction of new models.