- It was reported in Business Times that Mitsubishi Motors Corp (MMC) plans to produce the ASX in Malaysia for the local market. The ASX is a compact SUV, currently brought in as CBU and priced at RM138,156 (2 litre variant).

- Production is set to begin in January 2014 and sales in February 2014 via Mitsubishi Malaysia’s sales network. This would be Mitsubishi’s maiden passenger vehicle production in Malaysia after having been in the country for the past three decades.

- We gather from TCM that initial contract assembly volumes involve c. 4,000 – 5,000 units. We estimate incremental earnings of RM4mil-5mil from the contract assembly job based on assembly charge of RM6K-7K per car. However, this number might expand to 10,000-15,000 units should MMC decide to contract assemble other models here.

- Among key models that MMC is currently selling in Malaysia are the Lancer (C-segment sedan priced at RM122,546) and the Mirage (A-segment passenger car priced at RM55K-63K). Besides these, MMC also sells 4WDs/pick-ups such as the Triton and Pajero here.

- In the early years of Proton’s formation, MMC was a shareholder and the strategic foreign partner for Proton and provided platforms and technologies, e.g. for the Proton Wira (from the base model Mitsubishi Lancer) and Proton Satria (Mitsubishi Mirage). It was until 2-3 years after Proton’s establishment that MMC pulled out of the partnership due to financial problems at home.

- What strikes us in this latest deal is that prior to the acquisition of Proton by DRB-Hicom in May 2012, MMC had been in talks with Proton to contract assemble its cars here (initially the ASX) and to co-develop engines under a strategic, non-equity (at that point) deal.

- The recent move to contract assemble via TCM comes hot on the heels of DRB’s decision to form a strategic partnership between Proton and Honda. The deal also comes despite ample capacity at DRB’s Pekan plant and Proton’s Tanjung Malim plant. DRB-Hicom (via EON) currently owns a 49% stake in Mitsubishi Malaysia, the official distributor of Mitsubishi models in Malaysia. While it is perhaps still pre-mature, we would not rule out possibilities of Mitsubishi Malaysia seeking new local partners in the future. 

Source: AmeSecurities