'Honda Malaysia plant to create more jobs'

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