KUALA LUMPUR: More jobs await autoparts makers as Honda Malaysia plans to invest RM1 billion over the next three years to build a new production line, improve infrastructure and dealers network.
OSK Research said the capital expenditure drive was anticipated, considering that Honda Motor Corp took a big hit last year when its production line in Thailand was damaged by floods last year.
It said Honda's massive expansion augured well for local autoparts makers in terms of beefing up their order books.
"We think Ingress Corp will be a major beneficiary, noting that the company has been winning jobs from Honda in Malaysia, Thailand and Indonesia," it said in a research note.
Others like MBM Resources Bhd, APM Automotive Holdings Bhd and Delloyd Ventures are also potential beneficiaries of the bigger number of jobs created by higher production volume from Honda.
"We have heard from autoparts makers that Honda Motor Corp may shift its production line to Malaysia to mitigate the risk of future production disruptions in Thailand.
"The capex drive over the next three years will be for another production line for the assembly of completely knocked down Jazz Hybrid and capacity expansion for the production of the 'Honda City," it added.
In the initial stage, OSK said Honda would assemble the Honda Jazz Hybrid at its existing line until year-end.
"Production will then shift to the second line as soon as it is ready in the fourth quarter of next year.
"The second line will also produce the popular Honda City," it added.
OSK said the investment would also allow Honda Malaysia to mass manufacture hybrid vehicles, making it the first automotive manufacturer, to produce hybrid vehicles in Malaysia.
"This move may make Honda eligible for a 100 per cent fiscal deduction based on either pioneer status or investment tax allowance, to be granted for ten and five years, respectively," it added.
On another development, OSK said it was not surprising that Volkswagen AG (VW) was still keen to acquire a stake in Proton, given that it already had an existing partnership with parent company, DRB-HICOM.
"We think it is highly likely that VW will take up some form of strategic ownership in Proton sometime next year, in an attempt to make the latter its production hub for the Asean region," it added.
However, OSK said an outright acquisition of all of Proton is highly unlikely, as Proton is, after all, a national automaker.
"Note that when DRB-HICOM took over Proton, one condition stipulated that should DRB-HICOM receive another offer for Proton from other bidders within a year of the completion date, written consent must be obtained from Khazanah," it added.
In such an event, DRB-HICOM will have to pay Khazanah the difference between the offer and the acquisition price, OSK said.
-Bernama