2 days ago
From shophouse to global hub: Malaysia's automotive journey
Asia's very first automotive assembly activities date back almost one hundred years.
The pioneers in local assembly used to be Ford, when in 1926 was incorporated in Singapore as Ford Motor Company of Malaya Ltd. Operating from a small shophouse garage, it began with wheel-fitting and touching up early Model-T kits sourced from Ford England and Canada. A far cry from the state-of-the-art assembly plants that can push out thousands of units a month today.
The first fully-fledged automobile assembly plant was set up in Singapore by Ford, with production facilities of completely knocked-down (CKD) vehicles. During the Japanese occupation, the plant was used to produce military trucks.
In the post-war years, as newly independent nations began charting their economic futures, industrialisation – and with it, automotive manufacturing – became a natural focus.
The Asean blueprint for development post-independence has been largely industrialisation-focused and began to look at reducing their reliance on imported vehicles. Over time, the most critical starting point is to upskill the talent, implement government policies and incentives, and build local infrastructure to support it.
The automotive supply chain has grown tremendously, a spark that has ignited investments, skills development, and technology transfers – powering hundreds of thousands of livelihoods. As the supply chain became more embedded, global brands began to eye countries like Thailand, Indonesia, and Malaysia as suitable hubs for regional expansion.
Initially manufacturing for the domestic market, post-war economies were flourishing, and mobility was an essential part of this growth.
The following decades saw the automotive industry evolve organically, gradually increasing the local content component in alignment with national policies, attracting interest and investment from European and Japanese brands, who saw Asean as an attractive hub for regional expansion.
The era of complex
automotive supply chains
Digitalisation, trading blocs, and supply chain-related technologies gave the world a massive boost when it came to regional integration. Cars were now being built with content from multiple countries, with each component being optimally sourced at the best quality and price from vendors across the region. This allowed for increasingly resilient supply structures, with better flexibility and scalability.
Toyota, with its Toyota Production System, pioneered manufacturing and logistical processes that are emulated globally, optimising complex supply chains to clockwork precision.
Today, your car could be designed in Japan, made in Malaysia, with tyres from Thailand, brakes made in Indonesia and seats from Vietnam – a truly Asian testament to integration – and Malaysia played the role of quiet architect. Working fantastically together, with each component coming together at the right time and in the right specification on the final assembly line.
Domestic or export?
Why not both?
Export-oriented hubs that also serve the local economy are a great move forward. Jobs created, skills enhanced, technology infusion, and the local market gains access to more advanced cars – the economic benefits multiply.
Whilst the world's leading car brands do not originate from Asean, the region remains a strong manufacturing base and a key source of growth, ensuring their significant and enduring presence here.
The rise of xEV and China
In more recent times, the rapid growth of electrification has shifted the technological focus, attracting big leaps in investment, technology, and upskilling. One cannot talk about electrification without mentioning China.
China is integral to electrification. Supported by a thriving local economy, the country has been able to grow the local infrastructure exponentially in developing batteries, their component technologies, and raw material extraction and refinement, and is now the linchpin of critical technologies in the pursuit of a green future.
It is a space that is rapidly evolving, too, as governments increasingly view energy transition as a matter of national security and critical industries. New iterations of batteries and platforms continue to leapfrog previously cutting-edge technologies.
Can Asean keep up with this pace of evolution?
While no one region can match China's scale overnight, Asean's opportunity lies not in direct competition – but in complementing the ecosystem. In a world of shifting alliances, agility and trust matter more than sheer volume. Supply chain interdependencies and geopolitical conditions will make alliances and partnerships a critical, if not essential, pathway to joint prosperity in the region.
Asean member countries make up 670 million people, making it the fifth most populous region. Collectively, they produce around 4.5 million cars annually, making it the fifth largest sub-regional market. Global brands recognise the potential, catapulting Asean as a hub for manufacturing, exports, and component supply.
Asean's generally trade-friendly policies also make it favourable for manufacturers looking to access markets they otherwise cannot. This cushions the impact of geopolitical tensions, like the tariff wars. Malaysia, Indonesia, and Thailand are well-positioned to capitalise.
In the process of building these support networks for car brands, we continue to grow and flourish. Our talent pool, technology and training skills, research and development, and production capabilities continue to expand. From a humble shophouse to regional relevance, Malaysia's journey reflects the power of steady progress. And our future – built on talent, trust, and tenacity – is going strong.
