KUALA LUMPUR: Malaysia’s leading car manufacturer, Perusahaan Otomobil Kedua Sdn Bhd (Perodua), is planning to establish a regional hub for spare parts on the East Coast, leveraging the upcoming East Coast Rail Link (ECRL).
Perodua’s President and CEO, Datuk Seri Zainal Abidin Ahmad, indicated that Kuantan, Pahang, is a strong candidate for the hub’s location, though other sites in the East Coast are also being considered.
“This initiative will benefit our East Coast customers by providing a comprehensive vehicle hub, including spare parts and pre-owned vehicles,” Zainal said during the panel session titled “East Coast Rail Link (ECRL): ECRL@Selangor – Economic Benefits & Opportunities” at the National Investment Seminar yesterday.
He emphasized that the project could significantly stimulate economic development in the area through partnerships with Malaysia Rail Link Sdn Bhd (MRL) and local entities in Pahang.
Earlier this week, Perodua signed a memorandum of understanding with MRL, the 665-km ECRL project owner, to utilize the rail network for transporting cars from its Serendah, Selangor plant to the East Coast, as well as to Sabah and Sarawak.
The ECRL will feature 20 passenger stations and 10 freight stations. MRL’s head of strategy, Mohd Zaidi Sharif, highlighted the Puncak Alam ECRL station in Selangor as a potential site for a steel products distribution hub and the manufacturing of finished steel products. “We will bring all the raw steel products from Kemaman and Kuantan to the Puncak Alam ECRL station for distribution to the Klang Valley area,” Mohd Zaidi said.
Zainal noted that the proposed steel hub at Puncak Alam could attract investments in auto-related steel-based activities such as tools, molds, and dies, which are crucial for stamping and injection molding processes in the local automotive industry.
“For the automotive industry, we have brought in vendors from Japan, China, and South Korea to invest in Malaysia and set up joint ventures with our local vendors. However, we have not been able to attract investments to produce automotive-grade steel. Japanese vendors have indicated that while incentives from the Malaysian Investment Development Authority are important, a comprehensive logistics supply chain is crucial. This presents an opportunity to promote the automotive industry and attract investors to Puncak Alam for steel-related investments, particularly in tools, molds, and dies for our stamping and injection molding processes,” he explained.
Zainal also highlighted the cost savings expected from transporting cars, parts, and components via the railway instead of by road. Currently, Perodua ships its cars from Port Klang to customers in Sabah and Sarawak via the Straits of Malacca. The ECRL is expected to enhance regional integration between the East Coast, Sabah, Sarawak, and the West Coast.
“We used to transport our completely built-up (CBU) vehicles using trucks and lorries, which posed challenges in efficiency and safety. Efficient transportation infrastructure is key to attracting investors. Currently, we do not have vendors in Sabah and Sarawak due to logistical difficulties, with most vendors situated in Shah Alam and Penang. With the ECRL, more suppliers will be able to invest in Pahang and Terengganu,” he said.
Domestically, Perodua holds a 40% market share and aims to increase this to 45% this year. The company also plans to grow its exports over the next few years.
“We want to increase our exports but still have about 120,000 outstanding bookings to fulfill domestically. We must deliver these bookings first before we can export. Based on our plan, exports should constitute about 10% of our total production. Currently, our production supports 350,000 units, so we aim for 35,000 units for export. We used to export to Sri Lanka, but the country is not accepting any CBU imports due to economic circumstances. We have shipped cars to African countries and are looking at markets like Mozambique. Additionally, we export used cars to Fiji and other countries,” Zainal said.
The ECRL railway line from Kota Baru to the Gombak Integrated Terminal is projected to be completed by December 2026 and operational by January 2027. The extension from Gombak to Port Klang is expected to be finished by December 2027, with full operations beginning in January 2028.
Mohd Zaidi stated that the project is progressing according to plan and is targeted to be completed slightly ahead of schedule. “Those familiar with the construction industry understand that a project of this scale and size, a 665-km linear project involving more than 1,400 construction sites, is a mega challenge to keep on track,” he said.
