Review:2014 Perodua ALZA

 

Model cycles for the big global players typically average 5 years and the big companies can maintain this industry ‘norm’ because they produce their models in gigantic numbers. This enables them to have economies of scale as well as derive enough from profits to fund development of the next generation.

For the carmakers with lower volumes, the challenge is greater as they do not have the same economies of scale to enable them to have low costs that can make their pricing competitive. So there are two approaches: either you produce a small number of exclusive models (like Ferrari or Bugatti) and price each unit at a million ringgit, or you stretch the lifespan of the model. In the same way that a longer repayment period on your loan means a lower instalment each month, a longer lifespan for a model means more units produced and sold over a long period, enabling unit costs to be lower.

 

Perodua is in that category of companies which doesn’t have a gigantic production volume so it cannot play the big boys game, for now at least. It hasn’t stretched model cycles to over 10 years and has tried to go for 5 to 7 years which is realistic for an annual output of between 200,000 to 250,000 units.

It has also not been ambitious and tried to go into every segment. Its technical partner, Daihatsu, specialises in compact models and that’s where Perodua has remained, offering just a few models so as to maximise economies of scale. No point fragmenting the production with so many models that sell in numbers that don’t make commercial sense.

Perodua, like Proton, has had a ‘privileged’ start with special consideration being given to it by the government. However, it has never taken its position for granted and in fact, from the time Perodua started, it had the pressure of ‘getting into shape’ within a specific time-frame before the market opened up again (under AFTA). It was aware of the privileged position being lost after a while so it worked hard to be competitive and it focussed on quality to win customers over.

One could regard Perodua as a ‘privileged child’ who, instead of taking things for granted and expecting the good life to go on forever, instead chose to work harder and learn as much as possible so as to be prepared for the future when privileges are gone. Rather than keep asking for privileges to be continued, Perodua has prepared itself for the time when it has to fend for itself – and it has certainly done well.

Tonight’s launch of the new 2014 Alza shows how well Perodua has developed. The new model has improvements, as would be expected of a model that has been in the market for 4 years (during which time 167,000 units have been sold), but what is more impressive is that the new Alza is priced lower than before! Pending final approval by the authorities, the price reductions are between 2.1% and 7.4% or between RM1,117 and RM5,117, depending on the version. The following chart shows the estimated prices of the new Alza compared to the previous one, and the amount of reduction.

 

The reductions have nothing at all to do with any government initiative (other than asking carmakers to reduce their prices) and is entirely through the efforts of Perodua to reduce its costs, both for making the car as well as its own internal operating costs. When asked if there was any one area that could be singled out as having made the most significant contribution to lowering costs, Perodua’s President & CEO, Datuk Aminar Rashid Salleh said there were many things, both internal and external, and all contributed in one way or another.

Leaving aside the cost reductions in the product itself, he explained that the company was able to reduce its operating costs by increasing efficiency in the factory and raising productivity. This is a common thing for Japanese companies and clearly, Perodua has continued to absorb the lessons from its partner which have helped it become a success. It has not been arrogant to imagine that within 10 years, it can know everything and no longer needs to have a partner. In fact, the partnership with Daihatsu seems to be working out very well and technology transfer has been extensive.

 

As for the product, there has been some subtle restyling which has added 40 mm extra length in some versions due to the shape of the front and rear bumpers. The structure is also different due to the need to meet the ASEAN NCAP conditions. The previous Alza met the ECE R94 regulations and had a fairly strong structure but the ASEAN NCAP crash tests are more severe and in order to pass them, additional reinforcements had to be added as well as some re-engineering in certain areas. Perodua is confident that the new Alza should be able to get 4 stars in the ASEAN NCAP test.

However, to get 5 stars (the maximum) requires a model to also have a stability control system and that is not available. Nevertheless, going by the Perodua President’s usual smiling ‘wait and see’ response to the matter, we might see stability control offered someday.

Noise and vibrations are also said to be lower in the new Alza due to various measures, including addition of additional insulation in certain areas.

The chassis and powertrain remain unchanged because feedback from customers has indicated that there is still a high level of satisfaction with the performance, ride comfort and handling.

The cost of manufacturing the new Alza has been lowered in many areas due to a determined effort to cut costs. Some components have been redesigned with less complexity and more integration of each element. “But don’t think that cutting costs has meant a reduction in quality. We have maintained high quality standards and have not used cheaper or thinner materials to save money,” stressed a Perodua engineer.

 

The improvements that the customer will be able to see quite extensive and according to Datuk Aminar, the added value per unit is in the region of RM4,000. So not only is Perodua asking for less money for the new Alza but it is also giving more!

While there are cosmetic changes externally, the interior has received many upgrades with increased storage areas. There’s a new multimedia system with route navigation as well as a reverse camera available and on the Advanced version, there’s also an overhead LCD monitor for the rear occupants to watch movies.

 

Parents with small children who need their own childseats will be happy to know that there are now ISOFIX points on the second row. These internationally-accepted fixture points make it easy to attach a compatible childseat and keep it securely in place. The third row backrest is now in two sections so one side can be folded down to provide additional cargo space if needed.

With the high incidence of smash-and-grab robberies in Malaysia, Perodua is providing security window film on the SE and Advanced versions as standard. This film, which also has JPJ-approved tinting, will prevent the window glass from shattering, so the driver can have more peace of mind when stopped at a traffic light.

Finally, as a special gesture of appreciation to Malaysian customers, Perodua is offering its 3-year free service package for all its models registered during 2014. This package was introduced last year as part of its 20th anniversary celebration and the company has extended the money-saving benefit another year. The warranty period is for 3 years or 100,000 kms (whichever occurs first), as before.

Over the 50-month period that the Alza was sold since launch, the average monthly sales were 3,400 units and it has been the best-selling MPV in Malaysia. Perodua’s President feels that even though it is a ‘MPV’, it is no longer regarded as being only for families but as a ‘lifestyle’ vehicle. “It’s also bought by singles, not just families so it is truly a vehicle for everyone’” he said, expressing optimism that the model will continue to be among the popular choices of Malaysians.