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Home Latin America

Daihatsu tailors new cars to Malaysia and Indonesia

MtR by MtR
June 19, 2021
in Latin America
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OSAKA — Daihatsu Motor is stepping up efforts to produce cars tailored to Southeast Asian nations, adopting its fast, low-cost production method developed in Japan to emerging markets, starting with Malaysia and Indonesia.

Emerging markets are important to the Japanese automaker, which acts as a vanguard for parent Toyota Motor. Daihatsu is also trying to ensure its survival by brushing up its flexible production technology before vehicle electrification takes hold in emerging countries.

In March, Daihatsu released the first local version of its Rocky sport utility vehicle in an emerging market, Malaysia. Although the SUV’s overall structure is the same as that of the Japanese model, the Malaysian version has been designed to meet the needs of local drivers.

“As Malaysia has lots of express highways, cars often run at high speed. We had to figure out how to deal with that,” said Nobuhiko Ono, deputy chief officer at Daihatsu’s research and development management division, who headed the development of the Rocky,

Ono studied reports on local drivers’ needs and decided to tighten the brakes, concluding that drivers would feel less secure if the brakes responded softly when the pedal was pressed.

In Malaysia, it is not rare for parked cars to be targeted by thieves. The new SUV lets person in the passenger seat lock the doors when the driver is gone and there is danger. “The feature was added based on a suggestion from local staffers who tested trial models,” Ono said.


Daihatsu Motor entered full-scale auto production in Malaysia in the 1990s.

For the Rocky version released in Indonesia in April, Daihatsu used the same market survey and trial production routines as in Malaysia. The model developed for the Indonesian market was designed to perform well even on rough roads because many of the country’s roads are still unpaved.

The new models got off to strong starts, with sales reaching 4,000 to 5,000 units per month in Malaysia alone. They are also being exported to 50 other emerging markets, including in Southeast Asia and Latin America, under the Toyota brand.

Daihatsu was able to successively release local models in Southeast Asia thanks to its development technology called the Daihatsu New Global Architecture (DNGA).

Daihatsu began the development of a new SUV around 2017. At that time, Ono turned down the design team’s repeated call for a bigger body, stressing the importance of the automaker’s expertise in minicars.

Daihatsu chalks up more than 90% of its domestic sales from minivehicles, and Ono believed that it should use its experience in that field to differentiate its products from those of other manufacturers.

As a result, Daihatsu’s Rocky is 1.7 meters wide and 4 long, making the SUV only slightly larger than the maximum for minivehicles under Japanese standards.

“Women and the elderly avoid SUVs because they think it is hard to maneuver them in tight spots. We thought small SUVs could appeal to them,” Ono said.

Ono proved right. The Rocky won orders for 10,500 units — roughly five times more than expected — in the first month after its release in Japan in November 2019.

Daihatsu’s DNGA method of production played a big role in the successful development of the Rocky.

The DNGA enables the company to lay out the suspension and other key components in advance, realizing a parts sharing rate of up to 75% for compact cars and minivehicles. The integration of production lines helps the company cut both capital expenses and development time by about 30%.

The method, though not entirely unique to Daihatsu, is based on its concept of “small doubles as big.” While many automakers start designing cars with the average automobile size as a key reference point, Daihatsu, a minicar specialist, first allocates parts to ensure adequate in-car space.

To make a bigger car, Daihatsu just enlarges the auto body without repositioning the parts inside. “We can avoid waste because we add what is necessary later,” Ono said.

In Malaysia, Perodua, a local automaker partly owned by Daihatsu, has captured the biggest share of the local auto market, with around 50% excluding SUVs and other vehicles, according to market research concerns such as MarkLines. In Indonesia, Daihatsu commands a share of about 20%, second only to Toyota itself.

Nevertheless, Daihatsu’s future is not assured. In Malaysia, Perodua’s archrival, Proton, has released a number of inexpensive SUVs modeled after Chinese vehicles after Zhejiang Geely Holding Group acquired a 49.9% stake in Proton in 2017. Proton’s share in the Malaysian auto market rose to 22% in 2020, from 14% in 2018.

The wave of electrification has also reached Southeast Asia. Indonesia is considering introducing a carbon tax in fiscal 2022 to curb emissions from factories, automobiles and other sources. Chinese carmaker Great Wall Motor plans to build a Thai plant for hybrid vehicles to begin exports to neighboring countries. To compete, Daihatsu plans to apply the DNGA to the development of electrified vehicles.

Daihatsu and Toyota set up an in-house company to promote compact vehicles for emerging markets in 2017. Under the new arrangement, Toyota is responsible for mid-size and large vehicles, while Daihatsu makes compacts.

Daihatsu rolled out 520,000 vehicles overseas in 2019, up 65% from 2014. But overseas sales under its own brand fell 14% to 180,000 vehicles in the same year. This means Daihatsu sold 340,000 vehicles under Toyota brands in emerging markets in 2019, clear testimony that it has begun fulfilling the role of vanguard for its parent.

But Daihatsu’s presence within the Toyota group is not so big, as it accounts for only 4% of groupwide unit sales overseas. As Toyota seeks more outside partners, Daihatsu needs to accelerate its efforts to develop vehicles for emerging markets. For that, the company plans to add 10-odd models by 2025.

“We will continue to export inexpensive vehicles to emerging markets via Toyota’s sales networks for now but will have to set up our own local channels to increase sales in new markets,” said a Daihatsu executive,

The market for minivehicles in Japan is unlikely to grow sharply. Daihatsu’s future may depend on whether its “small doubles as big” philosophy can prove effective in developing markets in Southeast Asia.





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