Of the four, only Tan Chong today
remains as the distributor of the same brand it began with in the late
1950s, the longest of any company in Malaysia. The other three had
helped to grow the business for their principals to the extent that the
principals themselves decided to take over distribution and marketing,
relegating their local business partners to dealers.
This, however, only occurred in the past
15 years but it is typical in the industry; at some point, the owners
of the brand feel that they have to become involved directly to take
their brand further, more so in today’s highly competitive environment.
That Tan Chong’s status has not changed
in over 50 years is testimony to the good job it has been doing for the
brand and indeed, from the mid-1970s till 1985, it put Datsun at the top
of the sales chart. In fact, Malaysia was one of the few countries in
the world where Datsun beat Toyota and this certainly gave Tan Chong a
lot of clout in Tokyo when it came to negotiating prices and
specifications. One of the two founders of the company, Tan Sri Tan Yuet
Foh, was well known to the Nissan people and of course, highly
respected. Old-timers in the company remember him as having a ‘very
strong bladder’ and stamina for lengthy meetings, outlasting the
Japanese… probably a tactic to get a lower price on the cars!
As a family-run business, it was often
noted that the business philosophy was conservative but this is not
unusual since owners regard their own money as being at stake. However,
the conservative practices have proven wise in times of recession and
Tan Chong got through three of them because it was cash-rich, having
been prudent in spending at all times. While some companies were forced
to take loans to stay in business, Tan Chong got by with its own money,
an advantage in such times.
The
head office of Tan Chong is still in the same spot as it was when the
company started over 50 years ago. At right is one of the flagship
showrooms in Petaling Jaya
The story of Tan Chong began with a
brave venture by two bothers – Tan Yuet Foh and Tan Kim Hor – to import
and sell a Japanese brand of cars called Datsun. At that time, in the
late 1950s, European models were dominant and Japanese cars were only
just beginning to appear. Their design was not much different from the
small European models but they were perceived as being inferior. The Tan
brothers had no experience selling cars and in their first year of
business from a shoplot in Jalan Ipoh, Kuala Lumpur, they sold 39 units.
Undeterred by discouraging comments, they figured that if nobody bought
the cars, they could still use them in some other way.
Hard work and perseverance was necessary
to sell Datsuns during the 1960s. There were still some negative
feelings by older Malaysians who had unpleasant memories of the Japanese
presence in the country during World War II. The cars were cheaper than
the European models but their lightness and thin construction drew
remarks that there were ‘made from Milo tins’. According to an industry
veteran who sold cars in that era, the infamous ‘Milo tin’ reputation
may have come about when a workshop had repaired damaged body panels
using scrap metal that included old tins – including Milo tins. He said
that it was possible that the repainting was not done properly and
people could see some wording underneath.
A
Tan Chong branch in Klang in the 1960s, and on the right is a Datsun
advertisement in 1979 for one of the many models it offered. The model
was the 100A which had front-wheel drive many years before the FWD trend
began
The Tan Chong assembly plant in Kuala Lumpur shortly after it began operations
In 1963, the government indicated that
it would make it advantageous for those who were willing to have their
vehicles assembled in Malaysia, a move that would help in
industrialization and create more job opportunities. Locally-assembled
vehicles would be taxed less but would also be required to use
locally-made parts if they were available. Nissan, along with a number
of other carmakers, quickly began to plan for local assembly and by June
1968, began sending completely knocked-down (CKD) packs of the Datsun
SSS to Capital Motors, one of the new assembly plants in Johor. This
benefitted Tan Chong as its cars became cheaper and Datsun sales rose
quickly. By 1971, however, Capital Motors was sold to General Motors
which required all the capacity available so Datsun production was moved
to Swedish Motor Assemblies (SMA) in Shah Alam, Selangor.
Roll-out of the first Datsun produced at Tan Chong's own assembly plant
The Tan brothers fully supported the
government’s policy and began to increase the use of local components
such as paint, tyres, wire harnesses, batteries, etc. At the same time,
seeing how sales were accelerating – Datsun was the best-selling brand
in Malaysia from the early 1970s onwards - they also began to consider
the possibility of having their own assembly plant. It was a bold but
far-sighted plan which became a reality in 1976 when Tan Chong Motor
Assemblers (TCMA) began operations in Segambut, then on the outskirts of
Kuala Lumpur. The plant was designed with the help of Nissan which
suggested that its layout be adapted from the company’s Zama plant in
Japan.
A notable process which TCMA adopted was
the electro-dipping (ED) system of applying primer to car bodies. In
this process, which had not yet been used by other assembly plants at
that time, the whole bodyshell (electrically-charged) is immersed in a
tank of primer paint, ensuring that every bit of bare metal is covered.
This helped to improve the durability of Datsun cars which had, by then,
become very popular because of their reliability and economical
operation.
By the time Tan Chong was 21 years old,
Datsun was a household name. Already a public-listed company (since
1974), Tan Chong had grown so large that when it had its anniversary
celebrations, ten separate functions had to be held in Selangor alone,
and there were also similar functions in every state in the country.
During the anniversary dinner in 1979, Tan Sri Tan Yuet Foh, said: “From
what I saw of the range of Datsun vehicles at the Tokyo International
Motorshow, and what the competitors will also be selling, I am confident
that the 1980s will be good for us but we have to continue to work
hard.” For the Tan brothers (and the rest of the family), the success of
being No.1 in the market was not taken for granted.
However, what Tan Sri Tan had not
expected was the major development in the Malaysian auto industry in
1984 which would impact all car companies and change the automotive
landscape. This was the announcement of the National Car project which
would be fully supported and financed by the government. The automotive
industry was seen to be a potential catalyst for greater
industrialization and the government wanted to be directly involved in
it so as to manage its development.
Special
privileges given to the National Car – the Proton Saga – enabled its
price to be RM4,000 lower than the best-selling Nissan Sunny 130Y (the
brand name had been changed to Nissan in 1984). Sales of Datsuns as well
as other popular brands began to decrease as Malaysians bought Protons.
For Tan Chong, this was a very challenging period which required a
complete re-think of its future strategies.
Then came ‘endaka’ – the rapid
rise in the strength of the yen – which pushed up prices of Japanese
products. This added another challenge to Tan Chong which saw its sales
drop so substantially that it even had to stop vehicle production for a
while. Unsold vehicle stocks grew quickly and as the company ran out of
space to keep them, empty plots of land had to be borrowed to park the
vehicles all over the country.
Understanding that they were prevented
from competing in the lucrative lower end of the market, Tan Chong
decided to undergo an ‘image up’ strategy . No longer would it position
its products as ‘cheap’ though they were still among the cheapest
available after the Protons. There was increased attention given to
customer care and facilities were upgraded. Fortunately, the company had
a large and loyal base of customers with the cars’ proven reputation
for being economical to operate, reliable, long-lasting and also good
resale value. Unlike some other brands, Nissan was a brand which a
father encouraged his children to buy and they in turn would also do
likewise with their children in later years because the ownership
experience had been very satisfying.
From
selling cheap cars to taxi operators in the 1960s and 1970s (top), Tan
Chong changed its strategy after the National Car entered the market in
1985. It raised the Nissan image with products like the Cefiro (middle)
and today, the company is also involved in marketing Infiniti, the
luxury brand of Nissan (above)
The dark period of the second half of
the 1980s was a blessing in disguise, the old-timers at Tan Chong would
later say. It was tough but the employees also learnt to work in a more
efficient manner, while the organization became leaner. And as the
situation stabilized and then improved, the company bounced back and
moved forward again. Lessons learnt were valuable as when another
recession hit in the late 1990s, the company was better prepared to cope
with it.
Nissan too went through a dark period of
its own with financial problems that led to an alliance being forged
with Renault in 1999. Over the next seven years, Nissan would focus on
its own recovery and as a result, minimal attention was given to the
ASEAN region. This meant that new products were few and far between and
Tan Chong had to do its best to keep people interested in Nissan models
as well as maintain customer loyalty. Through it all, Tan Chong never
wavered in its loyalty to its Japanese principal and prepared for growth
in the future. It had many other business activities as well but the
automotive business would always be at its core.
Though occupying a large chunk of land
in the Segambut area, expansion over the years had used up most of the
available area and the location of the TCMA had also become rather
impractical as Kuala Lumpur was much more congested. The sales volume
for Tan Chong had also grown substantially over the years and besides
that, like many old plants, the layout of the Segambut plant did not
readily allow the use of modern manufacturing processes like modular
assembly.
“The new plant is crucial as the
Segambut plant alone would not be able to cope with the expected
medium-term production and sales requirements. It will play a critical
role in the daily business operations of the Group. Going forward and in
line with Nissan’s aspiration to increase its worldwide sales volume
under the Nissan Global Plan and beyond, the sales volume of Tan Chong
Motors is also projected to expand in tandem,” said Tan Chong Motors
Chairman, Datuk Tan Heng Chew when he announced the construction of a
new plant in 2006.
The
company's second plant in Serendah uses modern manufacturing processes
such as modular assembly for greater efficiency, speed and higher
quality
The new plant, in Serendah, began
operations in 2007 and uses modern processes for efficiency, speed and
higher quality. The original investment was RM191 million (5.5% of which
was contributed by Nissan as a minority shareholder in the plant) and
for Phase 2, another RM100 million is being spent. The capacity will
then increase to as almost 64,000 units a year with two shifts. As with
the current phase, the increase in output will depend on market demand
and a second shift will only be activated when needed. The company also
has a third plant in Shah Alam, Selangor, which was formerly owned by
Ford Malaysia. This is presently inactive but should new developments
see greater demand, then it can be quickly tooled up.
It’s been over 50 years since the
company has been selling Nissan vehicles and Tan Chong today is stronger
than ever and ready for whatever challenges come its way. Its Nissan
product line-up has been refreshed and growing volumes indicate very
good acceptance by Malaysians. Furthermore, the company, in
collaboration with Auto Dunia, is also involved in the marketing of
Infiniti, Nissan’s luxury brand. An affiliated company, TC Euro Cars,
handles Renault as well.
Tan
Chong is one of Nissan's longest business partners and it has been
recognised as one of the company's top global distributors for many
years
As the original Malaysian car company,
Tan Chong will continue to develop its business here but at the same
time, it is also looking beyond Malaysian borders to expand. With its
good track record, it has been given the the Indo-China market to
develop the Nissan brand and is already assembling vehicles in Vietnam.
There is also a ‘wind of change’ in the
company as a new generation of the family begins to become more active
in the business. Young and in tune with the times, this new generation
has a different attitude from the earlier two generations, and though
conservative in some ways, has The Right Stuff to face the challenges in
a marketplace very different from the days when the two Tan brothers
started the company.
