LOCAL ASSEMBLY

Many Malaysians cast doubt on locally assembled premium cars. So I reviewed the new Mercedes-Benz GLC 250 right where it's made - Pekan, Pahang.

by Bobby Ang

bout 7 years ago I first set foot in Mercedes-Benz's plant in Pekan, Pahang. It was an eye opening experience for someone like me who had just join the industry back then. Since then I've visited quite a number of other assembly plants in Malaysia, and of course, throughout the years, I was also lucky enough to visit some state-of-the art production powerhouses in Germany. Of course, the only time we're supposed to feel upbeat when we mention Malaysia in the same breath as Germany is perhaps during a badminton match. Judging from the immense hype in Malaysia for what is essentially the launch of two little econoboxes from both of our car makers, I'd like to assume I know the level of expectations we Malaysians have when it comes to new cars - not exactly extravagant.

Yes I know Germans pay very high income tax rates, but comparatively speaking, say for example a marketing executive in Germany who makes about €40,000 a year after taxes. A base Mercedes C-Class starts from about €30,000 odds, which is actually less than what she makes in a year in actual terms. Considering that rental rates are similar pound for pound, she can afford it - if she wants to.

Malaysia on the other hand, the marketing executive might be earning RM40,000 a year as well, and rental will be somewhere around RM1,000 too. The equivalent RM30,000 car? We know the story don't we? She needs to top up to RM50,000 just to receive basic safety equipments in her car. But why am I arguing this point? Again, it's demographics. In Germany, a marketing manager can easily afford a Q5, over here? Maybe a K5. This is also the reason why marketing is done very differently over here in Malaysia. The communication that was crafted for an E-Class in Malaysia is perhaps on par with what a Bentley or Porsche customer receives in the US or Europe because they are basically speaking to audiences belonging to the same demography. Yes, a Rolls Royce costs just RM800,000 in the US, with that money, you can't even get yourself behind the wheels of say a BMW M6 in Malaysia.

A

When it comes to premium cars however, you might be in for surprise if I were to tell you that according to the grand scheme of demographics however, a Malaysian who buys a premium car over here might be several rungs up the white collar rat race as opposed to that of a German who buys one.

What this literally means is that technically speaking, it is not easy to simply satisfy the average Malaysian premium car buyer. Aside from the usual freebies when it comes to servicing and maintenance, the musical concerts, golf tournaments and fashion galas etc, the cars would also have to go through a stringent process to make sure they comply to international standards. And doing so isn't an exclusive Mercedes-Benz thing, it applies across the entire premium sector, be it BMW, Audi or Lexus and Infiniti. That cliche statement of 'Specifically crafted for the discerning you.'; might as well be tweaked to 'Specifically crafted for the extremely discerning you.' for such markets.

'What this means, is that it is not easy to simply satisfy the average Malaysian premium car buyer.'

Before we step into Mercedes-Benz's plant, most of us motoring journos already knew what to expect. We know Malaysia is comparatively a very small market for premium cars (biggest in ASEAN though). Putting aside the ridiculous taxes and excise duties that car makers have to endure, is the issue of Approved Permits where on one hand we encourage foreign car companies to invest in Malaysia in the name of technology transfer, setting up training centres,  and triggering the growth of automotive supplier networks etc. Perversely, the more cars that official car makers assemble in Malaysia, the more Open APs will be issued by our government to the AP holders in Pekema. The best part? We now have SINGLE year National Automotive Policies that makes it impossible for car makers to plan anything other than which shopping mall they want to have roadshows in the next quarter.

Compounded by such policies, it's almost impossible for car makers to progress into full scale investments in Malaysia. Hence the small volume means we won't be seeing robotic arms swinging back and forth to millimetre precision assembling cars over here. That being said, allow me to explain a little bit about car making, as it all comes down to 'How you want to achieve your objective.' actually. On one hand it can be the utilisation of robots, on the other, it can also be a combination of multiple plants each assembling a few components, with a mixture of humans or robotics, and then applying sound logistics to put everything together.

Say for example Audi's plant in Ingolstadt, due to local district government requirements, the ratio of machine-human assembly process must be kept to a ratio of 25/75. What this means is that only 25% of automation is allowed in order to keep employment ratio of the city in check. Having 100% automation doesn't necessarily mean it will be of the highest quality. It all comes down to various processes that are design to achieve the same results across all anomalies, and of course subjected to frequent audits to improve quality and efficiency.

Below: An example of a manual process in car making

And it's comforting to see that when we were being hosted by Mr Ingbert Grombach, the VP of Production and Plant in charged of Daimler's plant in Pekan. He is so confident of the various procedures and quality control mechanisms put in place, that for the first time ever, we were allowed to roam unchecked with our cameras. Unprecedented I'd say for any production plant, lest one without robotic arms flying around.

Mr Ingo (as he prefers to be addressed) acknowledged the differences between Pekan and that of say, Sindelfingen. Basically, in Germany, everything is perpetually on a rolling production chain where the car's are continuously moving. As each car goes through each 'station', the person in charged will quickly proceed with what he/she was trained to do, be it fitting a dashboard or the seats - all while the car continues moving.

Over here in Malaysia, Ingo called it a 'Tailored' approach where without the limitations of a literally unstoppable production line spewing cars after cars from behind, there's an advantage whereby every single vehicle can be checked, re-checked, pushed back and forth across various stations to make sure everything is perfect before being released to the next stop. Malaysian assembly actually has the luxury of 'time'.

Of course this doesn't mean that nothing has ever gone wrong throughout the years. About a decade ago, there was a batch of E-Classes that experienced water leakages along the front windscreen. The German engineers at the plant during that time were baffled as they checked through every single documentation, every single protocol and process to find where has it gone wrong. Not a single clue showed up as to what could've gone awry until they realised that instead of one continuous motion as required by the assembly process and training, one of the workers was applying the glue sporadically and randomly, causing the leak. Swift actions were then taken and audit procedures were put into place to prevent this from ever happening again.

Above: A GLC undergoing rigorous checks

Below: A short video of our visit to Mercedes-Benz's plant

In short, it's not an easy task at all to operate an automotive business in a country such as Malaysia where countless limitations are imposed upon car companies. Setting up a automotive manufacturing plant is not as straight forward as buying or renting a piece of land, building a plant and then producing cars be it for local or global markets, and then work hard to make profits and pay taxes. It was never that proper, for if it were, we would've been Asean's largest car producer thirty years ago.

The fact that in order for foreign car companies to engage Malaysian customers, they'll have to form a local partnership if they don't want to be limited by the restricted AP quotas that favour Pekema instead of foreign investors. - even after they're slapped by the 30% import and 105% excise duties. And it doesn't end there, as even the selling price has to be approved by the government as well.

Adding salt to the insult, Open AP dealers often sell the same cars at half the official price. Yes, even though regulation states that Open AP dealers can only import used cars, yet there's the case where the Mercedes-Benz GLE Coupe was first seen at an Open AP dealer's roadshow in shopping malls instead of Mercedes-Benz's showrooms - you can imagine how frustrated car companies can be at times.

'In short, car companies are penalised by Malaysians while helping Malaysians.'

Of course at such prices, we can't expect Mercedes-Benz to go full bore like what Volvo did with the XC90. Yes, Volvo gave up the costly Bowers & Wilkins sound system in the locally assembled XC90 so that they can make way for almost every imaginable advanced safety systems. Mercedes-Benz on the other hand, retained the Burmester sound systems - as they play a crucial role in creating the extremely upmarket feel of the cabin - and instead optimised the safety features to just the absolute important ones such as the Collision Prevention Assist Plus and the LED Intelligent Light System. You may click the videos above to understand how each of them function to keep the driver safe. You may also click the GLC above to check out all features Mercedes-Benz Malaysia has included in the GLC 250 4Matic AMG Line.

Now a quick intro on the GLC, Mercedes's first attempt at a mid-size SUV was the lack lustre GLK. A car that even Mercedes-Benz weren't confident with that they didn't even bother to make a right hand drive version. Fast forward, the GLC now competes with the popular BMW X3 and Audi Q5 head on. With Mercedes's new design language heavily applied both in and out, the GLC is quite a looker, especially from the rear. Despite being the latest to arrive, the GLC is still slightly smaller than the X3 from every dimension, while matching the Q5 very closely. In fact in terms of silhouette, the GLC is an exact carbon copy of the Audi Q5 especially the excellent proportion and stance. Of course that's no bad thing, as the Q5 is still the outright sales leader of this segment even though it was introduced 8 years ago. To give you some perspective, BMW sold 130,000 units of X3 in 2015, Audi on the other hand sold 260,000 units of Q5!

On the get go, the GLC 250 has very little wind noise even at speeds. The car also rides well over undulations and across highway expansion joints. Steering is a little bit too rapid for its chassis at times as you can tell Mercedes consciously wanted the driver to know it has sporty dynamics, what with damper settings that are probably a lawsuit away from BMW, with the identical options of Sport+, Sport, Comfort and Eco. Especially with the sporty steering that's 1.2 turns away from full lock. But ultimately, it's at best very near to that of the Q5 with slightly less pliancy, and perhaps a smidgen away from the X3 on 5/10s, while the Macan wouldn't even break a sweat. But being an all out driver's SUV isn't what Mercedes-Benz set out to accomplish. The right car with the right size, right style, right price for everybody is what they're after. And by that measure, I reckon the GLC is an investment home run for them.

LED Intelligent Light Syst‍‍‍em

Collision Prevention Assist Plus

Moreover, the high selling price of our cars actually requires a very tailored approach to marketing and branding. Just imagine if dealers are 'communicating' your new models on behalf of you before you do. And imagine this scenario whereby you bought a BMW i8 from a recond dealer, and then you missed some crucial software updates, and soon after, your car developed an issue. Do you believe the recond car dealer will entertain you? Worst still, would they even know what to do? In the end, for the sake of protecting their brand, BMW has to solve your issues on behalf of the car dealer who's laughing his way to the bank.

Speaking of banks, they are so clueless that a 2 year old reconditioned car is still considered a new car just because it hasn't been registered in Malaysia before. Thus giving the same interest rates as per what a new car buyer receives.

It's just amazing that given such logic defying, mind boggling conditions that are beyond reasoning, still, there's always someone we know, be it a friend or a relative who works in this industry be it a car salesman, a marketing person, a creative agency, or a small renovation company, who relies on this industry for a living. In short, car companies are being penalised by Malaysians while helping  Malaysians.

GLC 250 4MATIC AMG LINE
Specifications
Engine: 2.0 litre Turbo
Transmission: 9 speed GTronic
Power: 211hp and 350Nm
Performance: 7.3 seconds and 222km/h
Efficiency: 7.1 litres per 100KM
+ Styling, Refinement, Specifications
- Expect to, but did not outright beat X3 or Q5

Mercedes told us that most customers go for white and silver.

Mercedes has usurped Audi when it comes to interior panache

Nicely shaped and 40:20:40 rear seats are practical

Maximum optimisation of space results in this huge hidden compartment

The screen is rather small. And please don't spec grey on grey on grey

10 years ago, Audi stunned the world with their new family language, and ferociously build onto the momentum by overtaking Mercedes-Benz in the process and became the second largest premium car maker. But consumers soon got tired of their repetitive design and Audi soon became known as 'making sausages in different sizes' - a phrase used to describe BMW in the 90s before Chris Bangle came around. Mercedes-Benz's new design direction that's widely loved now, which helped them sell 250,000 more cars in 2015 compared to 2014. And placing them in a close race with BMW for 2016, of which Mercedes-Benz is slightly ahead for now. Now, should Mercedes-Benz quickly develop the next iteration of this family language to avoid being caught in the same trap as Audi? Especially considering that most customers hopped right into the A, CLA, GLA class, where they have another 30 years of car buying for Mercedes to retain them as customers. And the reason I'm bringing this up? Look at the picture, on the left you have the grey GLC and on the right you have the silver GLE. And we haven't even place the C, E and S side by side.

Mercedes-Benz GLC 250 4Matic AMG Line

Despite the odds, here we are testing the GLC 250, Mercedes-Benz's next offering for Malaysians. Priced at RM325,888, the GLC 250 4Matic AMG Line is only RM3,000 cheaper on paper against the CBU version introduced earlier on. Nevertheless, Mercedes-Benz has added quite a few features to make up for the minor price differences. First off, it comes standard with the Burmester sound system as well, but the local version now includes panoramic powered roof, Touch Interface COMAND infotainment system with Garmin Map Pilot, Keyless entry and push start are all the improvements for the interior. As for the exterior, the rims are now upgraded to 20" AMG multi spokes and of course, it's now an AMG Line. These features could've easily added RM30,000 to the list price, so it's safe to say that the locally assembled version is much better equipped.

Above: An example of a highly automated process