Volvo chooses Malaysia over Thailand
Carmaker Volvo, which operates under a company named Swedish Motor Assemblies (SMA) in Malaysia, has chosen to operate outside of Thailand and recently consolidated its Asean operations to a single location in Malaysia.
SMA managing director David Stenstrom told StarBizWeek in an interview recently that Volvo, which had previously operated out of both Malaysia and Thailand, was now focused on scaling up assembly production in Malaysia instead and today exports Volvo cars to Thailand.
“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,” Stenstrom said.
SMA’s recent corporate restructuring to focus on its Malaysian operations is actually aimed at increasing its production levels locally, which are expected to climb in tandem with the changing face of the company and bright economic prospects in this region.
“The business future looks extremely promising: This year we’ll likely produce 2,200 units, next year 3,000 units and three years from now we’re targetting 4,500 units per year. This includes the Malaysia, Thailand and Indonesia markets. Indonesia could be a good contributor moving forward,” he said.
The current assembly plant has a maximum capacity of 10,000 units and works on two shifts per day. SMA will gear up to produce more cars with the anticipated rise of demand for luxury cars in the region.
SMA currently assembles Volvo cars under the semi-knocked-down (SKD) basis with car bodies fully imported from Europe and thereafter assembled locally.
The company will soon see increased local production in Malaysia and all its car models from the Malaysian plant will be sold as completely knocked-down (CKD) units after it automates its assembly line and use more advanced technology.
“In the second quarter of next year I will install an ‘in-body-shop’ for all models because I need laser welding. I believe we will then be the first plant in Malaysia with laser welding. It’s quite advanced even in Europe, so this will be a challenge for us to get the competence in the organisation and also to run it on a daily basis,” he said.
