Malaysia Car Industry Entering South Asian Market

KUALA LUMPUR, Malaysia (AP) – Malaysia's first entry into the South Asian auto market will commence with the building of a $259 million assembly plant in India for Malaysia's Naza Automotive Manufacturing company, according to a news report on Tuesday.

A memorandum of understanding will be signed by Naza and the state government of Tamil Nadu, in September, to build the factory in the Sriperumbudur business hub in Chennai, Works Minister S. Samy Vellu was quoted as saying by the New Straits Times.

Naza mainly imports and assembles vehicles for South Korea's Kia Motors Corp.

The company will sell Naza and Kia vehicles in India as well as export them to Nepal, Sri Lanka and other neighboring countries, he said, according to the report.

No other details were available. Naza officials could not be immediately reached for comments.

Naza also has an agreement with France's Peugeot SA to assemble the Peugeot 206 model for sale in Malaysia, Indonesia and Thailand.

In April, Naza launched a 1.1-liter compact car, developed in collaboration with Italian, British and South Korean designers, and has said it planned to export the car. The privately owned company will become the third Malaysian auto manufacturer, after national carmakers Proton and Perodua, to export locally developed passenger cars.

The New Straits Times said Naza is expected to set up more assembly plants abroad to take advantage of cheaper labor and raw material cost, and expand its export business.

Naza has two plants in Malaysia and is building its third and biggest plant in northern Penang state. The new $354 million plant is expected to roll out cars by 2008 with an annual production capacity of 100,000 units, officials said.

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