By on September 17, 2012

Malaysia pretty much gave up on the idea of having a national car and sold Proton, a brainchild of former Prime Minister Mahathir Mohamad. This does not keep neighboring Cambodia from embarking on a similar silliness. State-owned ACICA signed “a US$2 billion join venture investment” with UK’s BIW Automotive to build a factory in Preah Sihanouk province for a Cambodian-made vehicle within the next three years, says the Phnom Pen Post.

The joint venture has big plans for a small car: It will build a factory with a capacity of around 300,000 units per year. It will produce a small low cost car, with eyes on the domestic market, ASEAN and the world.

Now who is BIW, you ask? Good question. The company calls itself “a specialist automotive and technology transfer business,” and so far, all it has is a plan. It wanted to build yet another “circa $3,225 Peoples Car”.

Prices are going up, and when the car is finished ()if it ever will) if will cost approximately $7,000 per unit now.

“By 2015-2016, we commit that Cambodia will have a Cambodian national car which represents the country, like Malaysia or others have. But the difference to Malaysia is that we will produce all parts, such as the body and engine, by ourselves. We don’t buy from other companies. It means that everything is made in Cambodia,” said ACICA’s Group Chairman Al Rumny. Good luck with that.

Mr. Rumny also needs someone who knows how to do budgets for car companies.

According to the report, $450 million of the $2 billion project will be used to build a new power station to supply the factory. An additional $1 billion will be spent on construction of a new township. The remaining $550 million amount will be used for the car project, Al Rumny said.

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24 Comments on “Cambodia Wants Its Very Own Car Industry...”

  • avatar

    “This does not keep neighboring Cambodia from embarking on a similar silliness.”

    Insisting on a home grown car industry controlled in large part by the government, seems to have worked out well enough for Korea, Japan and China. I’d hardly call it silly.

    • 0 avatar

      What worked for other countries in the past might not necessarily work in today’s environment. Especially since Cambodia seem to have a rather small domestic car market, they would have to export their product to be successful, which makes it doubly difficult. Look at other countries past Korea that try to build its own automobile industry, i.e. Malaysia. Proton succeeds only when it’s combined with strong protectionism. Without it, not so much. Since Cambodia is part of ASEAN, it’s part of AFTA (ASEAN Free Trade Agreement), which limits the tariffs on certain products between members. Thus protectionism is out of the question, especially if Cambodia also wants to export their product to other AFTA members. So, what’s Cambodia’s competitive advantage? How would their car be successful in other countries?

      Malaysia also enjoys huge income from oil, thus their government can prop up Proton for a while (though they appear to be getting sick of doing that.) Do Cambodia enjoys similar resources that would enable them to support their nascent auto industry for years to come?

  • avatar
    Polar Bear

    The degree of silliness depends on how much the government is involved. If the car companies are run as capitalist enterprises facing real competition the damage can be limited.

    In the case of Proton the company was the idea of a prime minister and financed with tax money and shielded from competition. To date, every new Proton model is introduced by the prime minister on TV. The resulting cars are best compared to what came out of the Soviet Union and Eastern Europe under communism.

  • avatar
    el scotto

    Uh no, not competitive before the 1st CAD program gets fired up. I’m pretty sure Toyota or Nano or Nissan has a nice little 3rd World car for 7k. No, I didn’t research 3rd world starter cars; If I’m in one I’ll have automatic weapons or a prostitute or both.

  • avatar

    The economic data has been in for quite some time and it’s very clear. Countries with auto manufacturing are better off and have a higher standard of living than countries that do not. It’s not silly at all. Unrealistic maybe.

    The issue is that the barriers to entry have fallen drastically since the advent of the PC. Getting a car plant is easy. Getting the institutional knowledge to exploit that plant is the hard part and keeping it in the family, so to speak, is next to impossible. Doing this while trying to make a profit? Good luck.

  • avatar
    Bela Barenyi

    How things have changed. Back in the good old days, they would have just asked an established carmarker for the license for an old model and would have created an own brand/sold it with a different badge.
    Fiat was one of the brands known this kind of deals (the 124 and the 131).

    • 0 avatar

      That still happens. Check out Pyeonghwa Motors up in the “bad” Korea. Combination of new Chinese licensed designs and older, but fairly new, Fiats.

      • 0 avatar
        Bela Barenyi

        I know that Pyeonghwa Motors in North Korea builds the Fiat Doblo and the Fiat Palio from CKD-kits. As far as I know it is one of Fiat’s last kind of license deals. Okay, there’s still Mekong Auto in Vietnam, but I think they stopped the production of Fiat from CKD-kits and also focused on assembling Chinese cars and only sell imported Fiats.
        It’s really sad that Fiat did not use their pioneer advantange from their various licensing deals in various emerging countries.
        I mean, they could have easily become market leaders in these countries.

        To understand how sad it is, just look in how many countries the Fiat 131 was once assembled:

        Córdoba; Argentina, FIAT Córdoba.
        Bogotá, Colombia; (Compañía Colombiana Automotriz).
        San José, Costa Rica (S.A.V.A.).
        Jakarta, Indonesia (Daha Motors).
        Kuala Lumpur, Malaysia.
        Casablanca, Morocco (SOMACA).
        Lisbon, Portugal (Fiat Portuguesa SARL, Somave Sarl)
        Singapore (Sharikat Fiat Distributors).
        Bangkok, Thailand (Karnasuta General Assembly Co.).
        Caracas, Venezuela (FIAT de Venezuela C.A.).
        Livingstone, Zambia (Livingstone Motor Assemblers Ltd)
        Helwan, Egypt (El Nasr Automotive Manufacturing Company)

        I know most of these companies which assembled the 131 do not exist anymore or changed their business, for instance, the Somaca plant in Marocco is now owned by Renault, but the Fiat brand was introduced in these countries. All they had to do was to offer suitable products. Fiat just abandonned most of these markets and nowadays only exports cars to these markets, but in very low numbers.

        It’s even worse, when you see where the predecessor of the Fiat 124 was once produced:

        Tolyatti,Russia,(Lada, as the VAZ-2101)
        Mumbai, India (Premier Automobiles Limited, as the Premier 118NE)
        Lovech, Bulgaria(Pirin-Fiat)
        South Korea (Asia Motors, was partly owned by Kia and later merged completly with Kia, was sold as the “Fiat-KIA 124”)

        Only in Turkey, where also the Fiat 124 was assembled by Tofaş, Fiat still contiued their efforts. Of course one of the reasons for this is that their Turkish partner Tofaş (partly owned by one of Turkey’s biggest family owned companies, Koc Holding, and partly owned by Fiat) has put much effort into this venture and is important for Fiat for the Doblo production. And Turkey is also an important market for Fiat (~ 16% market share of Fiat in Turkey).
        In India, Fiat just completly failed. From all carmakers they had the best starting point (introduced brand, older products were really sucessfull back in the time) in India, but they failed to understand the market. And the introduction of the Fiat Uno was a real disaster. Of course, some of the problem arose because Fiats Indian partner. “Permier Automobiles” was not capable enough or to be more precise, were completly incompetent to handle the introduction. Last month Fiat sold only several hundred cars ( 500 I think) in India, while others, who came much later to the party in India, sell several thousand cars every month.

        Fiat Brazil produces the right cars for many of the mentioned countries, where Fiats were once assembled and sold. So, it would be very easy for Fiat just so re-start their efforts in some of these countries by building cars from CKD-kits of several of their Brazilian models.
        I think Fiat could easily sell around 1 million cars p.a. in South East Asia. They just have to put some money in effort into this. And Fiat also could re-enter some countries in Africa. For instance, the first generation Fiat Doblo and the Fiat Palio (both generations, the recently updated one which still is based on the first gen Palio, especially the pick-up version and the “Palio Adventure Locker” with higher ground cleareance and the “new Palio” which bears resemblance with the Fiat Grande Punto) could be produced in Africa and in South East Asia. The Brazilian new Fiat UNO, introduced last year, could also be a good product for these regions. And of course the Fiat Siena, the new and the updated and still produced first gen Siena.

      • 0 avatar
        Athos Nobile


        Fiat assembled cars in Venezuela until 2000. They produced the 178 (Palio/Siena) and the Uno. Its history didn’t stop with the 131.

        The place was closed because the numbers “didn’t add up” (the stories from previous employees are different) and started importing CBU units from Brazil.

        That business was running sound until Chavez changed the automotive policy in ’07 and almost out of the blue the imports of EVERY brand practically stopped.

        Fiat is a brand that Venezuelans still appreciate. And who wouldn’t, the cars are solid, relatively reliable, dirt cheap to fix and have (still) a relatively well developed network (informal) or parts sellers and shops.

        And to make things more interesting, there’s a Chrysler site… which produce Jeeps and the Caliber, which hopefully will be replaced by the Dart (another highly estimated nameplate in the country). And then there’s an Iveco site, still busy producing trucks.

    • 0 avatar
      Polar Bear

      The Fiat 124 is still made by Lada in Russia, I hear. It was a smart and modern car. In 1966.

      • 0 avatar
        Bela Barenyi

        @Polar Bear:
        The production of the Fiat 124 based Lada was stopped this year.
        And I didn’t suggest that Fiat should build 40 year old models.
        Beside of that, it was a popular model in Russia. The production lasted that long because it was a cheap and easy to fix car. Furthermore, it was Ladas decision to keep on producing this car.

        My point was: The success of Fiat models, like the 124 and 131, in certain emerging markets was a great starting point for Fiat. For instance, Fiat could easily invest in the 1990s in countries like Russia, because they had a good starting point. But they didn’t use their advantage. And now, after almost every other established carmaker has either a joint-venture or an own factory in Russia, Fiat plans to build a factory in Russia to produce mainly Jeeps an perhaps some Fiats. Again, a little bit late to the party.
        Fiat has the appropiate cars for these kind of markets due their Brazilian division, whose success shows that their car right for similiar markets. Hell, Fiat Brazil sells more cars than Fiat sells in its domestic market in Italy. And it’s really sad to see that Fiat fails in India. The irony is that Fiat sells more engines in India than cars, because its 1,3 Mulitjet Diesel is so sought after/good that other carmakers like Suzuki-Maruti and Tata buy the engine from Fiat. Most customers, who shun Fiat cars in India, but own a Suzuki-Maruti or Tata with this Fiat engine don’t know that the engine is from Fiat. Some even call it “the national engine”, because it’s so popular and used in many different cars in India. With a bigger dealer network, with better after sales service and more models (currently only the Fiat Grande Punto and the Linea in India) they could be more successful.

      • 0 avatar
        Polar Bear

        @ Bela. Your points are well taken and I did not mean to disagree.

        I have spent considerable time humping around in the Russian Lada 124-version, driving or being driven, which is why I use every opportunity to make fun of it.

        My understanding was that Fiat was adrift and short of money in much of the 1990s, in the late Agnelli family dynasty period. Maybe those who know Fiat better than I do can confirm this.

  • avatar

    Why don’t they start by making step-through scooters first, and then graduate to tuk-tuk’s, and then truck bodies, and then trucks, and then finally passenger cars?

  • avatar
    Athos Nobile

    I hope to be wrong, but this will end in tears. I don’t know much about Cambodia’s car industry, but it is naive to think that a country will start from a scratch an endeavor of this complexity in merely 3 years.

  • avatar

    Is it just me, or did they steal Farrago’s favorite part of the B9 Tribeca?

  • avatar
    Polar Bear

    These people can’t seriously think they can build cars from scratch in the Cambodian jungle. It is like those optimists in Africa who are building a space ship in their garden.

    But with this much money involved, someone will profit somehow. Corruption, land grabs, illegal logging, anything but making cars.

    You will often find in these countries that when a hopelessly stupid nationalistic plan is presented to the public it is not stupid for those behind it – once you know what the real plan is.

  • avatar

    Cambodian Jungle? Can’t be any worse than Thailand, which builds cars for the entire Pan-pacific market for many Japanese and American manufacturers.

    But there’s the rub: Anyone who wants to competitively build cars in this market will have to compete with the ultra-low labor costs and manufacturer incentives laid out in Thailand. As Cambodia has little to no local market, they will have to export (thankfully tarriff-reduced) to other markets in the ASEAN region. Unfortunately, so does Thailand. So does Indonesia. So does Malaysia. So does Vietnam. So does the Philippines.

    And at least two or three of those countries are getting factories to build small Chinese cars. Which will compete with this on a price point while offering (I can’t believe I’m saying this) possibly better refinement.

    As Malaysia has found out… to fight these aggressive multinationals head on is pretty damn difficult. And a state-owned manufacturer will have a hard time staying competitive against a better-backed multinational with huge economies of scale in both production and research.

    Short answer: If you’re trying to take on Indonesia and Thailand in this market… you don’t know what you’re getting into.

  • avatar

    I wouldn’t be at alll surprised if BIW contained a few key personnel from the infamous Phoenix Consortium. To me, it looks like a bunch of 1st world shysters are shining-on a slightly naive but chash-rich 3rd world nation by showing them a bunch of fancy computer-renderings and Powerpoint presentations.

  • avatar
    Polar Bear

    The Cambodian jungle. The industry already present in Preah Sihanouk province is little more than weaving and canning shrimp. Thailand spent decades building a car industry north of Bangkok with Japanese help, with parts suppliers, transport etc. For a start you need a stable electricity supply and roads and railways.

    Even so this is manufacturing and assembly only, for foreign brands. It is not the fully independent car maker these people say they want to start in Cambodia.

  • avatar

    Malaysian Cambodia National Car company and the technology transfer busines will need to manage the complete transaction and process very carefully.

  • avatar

    Cambodia already has a tiny automotive industry.

    RMA Group does vehicle conversions (mainly based on Fords and Land Rovers) and is highly regarded for the quality of its work. Newspapers report they also assemble Ford Everest SUVs (based on the Ranger pickup truck). They participate in Ford Motor Company’s “Qualified Vehicle Modifier” (QVM) program.

    Camko Motor Company, a joint venture between Hyundai distributor KH Motors and Cambodia’s Ly Young Phat Group, assembles between 50 and 100 cars per month in a $62m plant in Koh Kong province.

    Also, Yamaha has a motorbike assembly plant in Cambodia.

    I’ve also seen ads that state Forland trucks are assembled in Cambodia.

    Finding clear, official information about these projects in the Cambodian and on-line media is very difficult. There are a lot of vague reports and short press releases, but it’s unclear to me what “assembly” means. The customs import duty rate is 35% for finished products and vehicles, so moving assembly from say Thailand to Cambodia, even if it just means screwing on a hood or light assembly, can lower the cost of a vehicle substantially.
    This should all change if and when the ASEAN economic union goes live (planned for 2015).
    The government is highly corrupt, but also very pro-business. A major obstacle is the lack of skilled personnel.

    I wonder if they are planning on building the telepathic Angkor 333 (Google it!)…

  • avatar
    Polar Bear

    As cheap as it might be to build cars in Cambodia, I doubt it is cheaper than the existing business model of stealing cars to order in Thailand.

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