A Case Study of Perodua’s Green Approach and Solution in Malaysia Automobile Sector

In a research conducted by
Hygino (2018), he concerned 1.0 Introduction
pollution generated by
vehicle and immoderately Perusahaan Otomobil Kedua Sdn Bhd also can be recognized as
use of natural resources is Perodua, is a Malaysia’s automobile brand established in year
degrading the environment. 1993. Perodua is the second automotive manufacturer in Malaysia
According to Kasturi and right after Proton which was introduced in 1983. According to
Nurul (2020) findings on the Perodua’s Corporate presentation (2017), UMW Corporation Sdn
impact of Covid-19 Bhd is the biggest shareholder holding a majority of 38% equity,
pandemic towards the follow by MBM Resources Berhad and Daihatsu Motor Co. Ltd
environment, countries had with 20% respectively, PNB Equity Resource Corporation Sdn
enforced aggressive Berhad 10%, Daihatsu (Malaysia) Sdn Bhd 5%, Mitsui & Co. Ltd
movement restriction and it 4.2% and Mitsui & Co. (Asia Pacific) Pte Ltd 2.8% (Perusahaan
inadvertently create a Otomobil Kedua Corporate Information, 2017).
positive influence in In the early 90s, Toyota, Nissan and Honda were domaining the
reduction of gases emission automotive industry internationally, as well as the long-time local
related to vehicle exhaust competitor – Proton whom was the market leader for decades. At
and human activity. The that point in time, Proton led Malaysia automotive market with
study indicates the accumulate market share of 56.3%, followed by Toyota, Nissan
importance of green and Honda. Perodua acknowledged the automotive market
innovation in automotive competition in Malaysia was intense, instead of imitating from its
sector, a full electrical rivalry, Perodua targeted on compact vehicle segment and chose
vehicle will be the next not to contend in the similar market niche.
game-changing technology
in the industry.

0 20000 40000 60000 80000 100000 120000

Sales (Unit)
 Figure 1: Malaysia Automotive Market Share in 1994 (Matt, 1995)

1.1 The Perodua Logo Perodua launched the best-selling and

Malaysian favourite of all-time vehicle –
Figure 2 shown a logo of Perodua, the logo
Perodua Myvi in 2005 (Danny, 2017). Perodua
launched in 1998 to serve as visual
Myvi overtook the car industry for 8
representation of the company itself as well
consecutive year and ranked at the top of
as to raise brand awareness. The green colour
best-selling car until the end of 2014.
represents social responsibility to the
environment and social welfare, the red
colour stands for the development of
competent workforce and the ability to
overcome challenges encounter in the
globalised perspective.

Figure 4: Perodua Myvi

Over the year, consumer’s realization toward

Figure 2: Perodua Logo
1.2 Core Product
In 1994, a year after the company established,
Perodua introduced their very first vehicle,
namely Perodua Kancil, a compact small-size-
five-door vehicle. The vehicle was designated
for low-income group, smaller-sized family
size as well as student who needed to travel
(Sherilyn, 2015).
environment issues changed their purchasing
behaviour. In regards of climate change and
environmental damage, consumers are
encouraged to purchase environmental-
friendly product which emphasize the
importance of sustainability and minimized
impact on environment (Joshi and Rahman,
2015). Perodua understood that going green
will be a trend in future market, they then
designed the cheapest with good fuel
economy model – Perodua Axia. Perodua Axis
made its first debut in 2014 and it became the
most popular car in Malaysia until now.
Consumer was convinced that Perodua Axia
consume lesser petrol and availability to
travel longer distance.

Figure 3: Perodua Kancil

Over the succeeding decade, Perodua

continuously developed for new model that
would satisfy consumer in term of capacity,
fuel-efficiency and price. Several year later,
 Figure 5: Perodua Axia

2.0 SWOT analysis

In discussion of Green Marketing business model and performance, SWOT analysis provide Perodua
a rationale view to implement Green Marketing Strategy. Before all else, Perodua acknowledgement
of internal and external factor that could impact its brand image and marketing position. The
following is to discuss the importance of adapting Green marketing strategy and meeting future
trend such as non-polluting and environment challenges in automotive industry. The findings define
how Green marketing policies could benefit the environment and at the same time satisfy consumer
(Saleena, 2015).

Figure 6: SWOT Analysis of Perodua in Malaysia

2.1 Strength

In Malaysia, Government provide subsidies for petrol over the year to ensure fuel price remain
affordable. However, the hikes of international fuel price are disturbing Government to fully
compensate and set the price below international level (Saari and Dietzenbacher 2016). The rise of
petrol price may discourage consumer from purchasing higher CC vehicle. While every automaker
worries the risen of fuel price may have great impact and uncertainty to the sales volume, Perodua
remains competitive advantage despite the worrying situation. Perodua products are remark as
compact size therefore the use of engine capacity is obviously lower than its competitors eg.
Perodua Axia has the highest rates of fuel consumption with the built of 998 cc engine displacement.
2.2 Weakness

Perodua has great reputation in term of performance and stability, but they don’t design or engineer
core component. Daihatsu, a Japanese automobile manufacturer, is very well-known for designing
engine part especially for compact vehicle. Daihatsu plays several important roles in Perodua,
management position as well as operational structure, such as manufacture major component and
supply to Perodua. This led to Perodua excessively depends of Japanese counterparts, limiting the
company R&D maturity and innovative idea. For instance, Perodua release a new model whereas the
engine was a rejected prototype version of Toyota. Consequently, consumer preference may shift to
competitors due to product maturity and awareness toward the environment.

2.3 Opportunity

Perodua has dominated Malaysia automotive market share for more than 10 years till present, it had
obtained 39.8% market share in 2019, an all-time record since it established and the number is still
growing (Matt, 2020). As the result of Perodua sales, Malaysia government has direct impact to the
performance of local automaker. Government implemented trade protection policy and taxes to
restrict foreign automaker from entering Malaysia market, safeguard “infant industry’ at its best
(Peter and Chandran, 2011). Nevertheless, Malaysia government had continuously supported local
automotive industry by granting subsidies and fiscal support over the year, these financial
assistances encourage the business to grow and defeat competition.

2.4 Threat

Although the extraordinary sales volume and performance Perodua has gained throughout the year,
the competition in automotive industry is a never-resting battle. The rise of electric and hybrid car is
becoming the new trend and players in the automotive industry is capturing the share gradually. In
comparison to table 1 and table 2, although Perodua took a great portion of the share but the raise
of foreign automaker should not be ignored.

Table 1: Malaysia’s Automotive Market Share in Year 2000 (Autoworld report, 2009)

Table 2: January – June 2019 Market Review (MAA Summary, 2019)

Competitors’ green activities will eventually pressure the industry to emulate green approaches,
maintain their competitive position and promote the importance of going green (Craecker & Wulf,
2009). Furthermore, Malaysia is slowly moving towards environmentally-friendly country by
promoting electric car and enhancing infrastructure. For instance, shopping malls in Malaysia have
provided chargeable parking space mainly for electric car user, this privilege benefit to frequent
driver who struggle to find parking spot. This could be a threat to automakers including Perodua if
developing green-oriented vehicle isn’t company’s priority.
3.0 Methodology and Limitation

The data shall be collected by a list of simple questionnaires (Appendix A) through a simple online
focus group method with Malaysia citizen who owns a vehicle. In general, to investigate the
perception of Perodua, how Green-marketing strategy would affect Malaysian consumer preference
on choosing vehicle brand. The research is supported by secondary data source such as published
source, historical data, newspaper, website, government record and so on to provide better
conception of this case study.

Due to Covid-19 movement restriction imposed by Malaysia government, face-to-face interview is

difficult to conduct in this situation. The conversation was recorded through online platform for
analytical purpose.

4.0 Green marketing and public realization

In an endeavour to ensure demand for more sustainable products, marketing strategy is often used
to persuade consumer to purchase green product. However, advertisement sometimes mislead
audience, that could jeopardise company image and triggered greenwashing phenomenon. A
successful green marketing process must satisfy consumer needs and safety to the environment.
Besides that, Vipin (2015) stated the social media has become widely used and create impact to the
method of marketing. Mehmet & Rasha (2017) highlighted the spreading speed of social media,
environmental issue is delivered effortlessly, younger generation is more worry the climate change
in the real world than older generation.

4.1 Solution

4.1.1 Company image enhancement and transparency

In a short-term perspective, Perodua should considers raising its brand image by participating green-
related event. It aims at eliminating the mislead environmental claims, commonly called
“greenwashing” content. According to Perodua official website, Perodua are constantly executed
Corporate Social Responsibility (CSR) in Malaysian community, especially anti-littering related event.
The contribution is admirable but it is never enough for a big organization like Perodua.
Volkswagen’s determination to move towards green is worth learning. The brand provided lesson
relating to environment for employees, encourage employee to carpool, minimize the need for
travelling. Nonetheless, all these ecological practices are granted rewards, it creates awareness
among internal employee, to an extend this habit could even delivered to end-customer (Craecker &
Wulf, 2009). Perodua should engage their employees in translating the green concern of the
company, as the company representative when engaging with customer.

Figure 7: Perodua Corporate Social Responsibility event (Perodua CSR, 2019)

Other than that, accreditation from recognized association is helpful for a company image. Perodua
had obtained ISO 14001 standards (international recognized standards for Environmental
Management) in 2018, it indicated the business partner and suppliers must strictly comply with
green practices as required by ISO standards. Although the commitment was well-acknowledged by
international association, in the view of public, they tend to seek transparency of the daily
operation, as in the raw material sources, supplier method of disposal or the usage of electricity and
water in showroom (E.g. Dealership’s building utilize eco-design is making use of natural light to save
energy). Furthermore, traceability of vehicle parts with the use of barcoding, no only help to trace
down serial number or location, it is allowing the customer to identify the origins of the materials,
what it is made of? The company should be able to share results and leave no hidden information
behind the public.

4.1.2 Launching the very first Perodua greener hybrid car

According to the reviews (Appendix A), Perodua has somehow failed to be a green product in the
sense that the vehicle is still consuming fuel rather than hybrid or fully electric. The need for
redesign and reposition its product in relate to green matter is the company’s top priority. An
innovative research & development is one of the foremost factors to compete in fast-growing
industry. The electric car provider, Tesla, has become a benchmark in Automotive industry,
automakers all around the world sense the potential of electric vehicle, they are being strive to
announce own electric car lately. However, Perodua is not moving along due to the innovation
standstill in current state. Perodua car is no doubt fuel-efficient but in terms of vehicle capability and
customer demand of more capacity, is generally not cost effective. Also, the findings (Appendix A)
indicated the respondents would rather select better performance car, because consumer value
reliability and sustainability very much.

Based on the dialogue, vehicle owner would prefer gas-electric combined vehicle rather than just
fuel-oriented vehicle. A new model of green hybrid car is what Perodua needed to clarify their green
standing instead of heading straight to develop electric vehicle. Although the interests of purchasing
electric car is rising rapid, some are concerned regarding the constant need for recharging and the
limitation of reaching or locating a port station in Malaysia as the concept is less developed. On the
other hand, the cost of production and hiring expertise is very high, lead to higher unit price.

4.1.3 Reuse, reduce and recycle spare parts

According to SPI’s Market Watch Report (2016), the emerging demand for fuel-efficient and
lightweight vehicles are lifting the volume of plastics production. Reuse, recycle and reduce concept
is the major part in green marketing. It is more important to raise awareness to carmaker,
considering most of the car parts are salvageable. Recycling used car’s part, reprocess and convert
into a new material; tyres, battery, carpet or water pump, these accessories could easily retrieve
from an abandon vehicle for reusing purpose. Most major carmaker has put into practice, Toyota
purposely design materials that facilitate the dismantlement, convenient for future recycling process
(Craecker & Wulf, 2009). BMW value in environment, 95% of the car parts are reusable left only 5%
to disposed professionally (BMW Sustainability Report, 2009). Throughout the body of a fuel-
efficient vehicle, plastics play an importance role in lower material cost and better gas mileage.
 Figure 8: BMW Sustainability report (2009)

This solution highlighted green practice in a long run, it is projecting the life cycle thinking of a
vehicle from the point where car is being manufactured, sold, aged, and disposal. Carmaker is still
able to make use of retrieve part for new vehicles. Perodua is suggested to imitate these foreign
carmakers green practice, maximize the used of plastic and other sub-components. Other than
material of the product itself, reduce the use of paper or unrenewable material during daily
operation shall be concerned. While plastics is still an ideal material for vehicle production, Perodua
should make use of the existing plastic until a substitute material is found. Implementation of eco-
branding strategy, such as avoid printing brochure or year book. As an alternative, replace with E-
brochure QR code or mobile application for branding purpose is commonly used nowadays. This
practice could efficiently reduce the waste of paper as well as cost saving on administration or
promotion.

5.0 Evaluation

In this case study, the automotive industry future trend in Malaysia and solution is demonstrated, as
well as the current issue related to Green-marketing practice is raising concern of CO2 emission and
sustainability. According to the green marketing strategy matrix, in choosing of green marketing
strategy, Perodua is at the stage of having high opportunity of green market but low in
differentiation its product greenness. Defensive Green strategy seeks to enhance its brand image,
and aware the importance of fulfilling green market segment. Perodua hardly differentiate
themselves with other green automotive competitors but it doesn’t mean they have zero
contribution to the environment. Perodua happened to participate ecological activities from time to
time, and had proven the company commitments. The solution mentioned above are the public’s
apprehensions and reasonable proposal, it would structure the company in a result of becoming a
green-oriented automotive company. Nonetheless, to measure one’s contribution, Perodua is
suggested to carry out Sustainable Development Goals (SDGs) to further discuss sustainable matter
and plenty of Green solution can be adapted.
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Appendix A

Q1. Do you know the automobile brand named Perodua? What do you know about the brand?

Daniel: Yes, Perodua is a local carmaker, produce compact size car. The price is cheaper than most of
the foreign car. Suitable for student and fresh graduate.

Carlson: Of course, my father just bought Perodua Myvi for my birthday present last month. Love it!
Although the car is so small but is plenty enough for a student.

Q2. How would you grade Perodua contribution to the environment? Is Perodua manufacturing
Green Vehicle?

Jacky: Perodua launched Axia years ago, the model was recorded the best fuel performance of all
time with below 1000 CC, but in order to be green enough hybrid car is highly needed to get the
company a green label.

Carlson: Yes, I think they have done well in producing green vehicle but they should focus on Hybrid
segment if reducing gas emission to the environment is their priority.

Q3. If you are given a choice between Honda, Toyota and Perodua, which would you choose?
Why?

Daniel: I would definitely choose Honda, because Honda is a trusted brand globally. They put into
effort to help the environment. Honda has wider choice in term of design and model, if you are
concern about environment, get a Honda City Hybrid, that car is fuel-friendly with reasonable price.

Jacky: My go-to brand is Toyota, because I feel safe while driving Toyota car, I seldomly heard Toyota
user complaint about their car, and I think it’s good for environment as I saw some advertisement of
Toyota mentioned about sustainability.

Q4. Why aren’t you guys considering Perodua in the first place?

Carlson: Although Perodua price is affordable for a student, but I have thought about reliability and
sustainability in the long-term perspective.

Daniel: Yeah, not to mentioned the car design and car performance is less attractive, if I have the
budget, I will not consider Perodua unless they release a environmentally-friendly model.

Q5. In a scale of 10, what is the chance you would purchase a green-oriented brand? Why?

Jacky: 8/10, if you go back to 10 years ago, Malaysia air pollution isn’t this bad. Technology
advancement enhance quality of life, but human activity is damaging the mother earth, if we aren’t
planning to do something now, our future generation will suffer.

Daniel: Im giving an 8 as well, even though green product is more expensive than normal product, I
would buy a green product for the sake of our future generation. Do less harm to the environment
and raise the awareness that earth need our helps.

Carlson: I agree, 10/10, 100%. Please purchase organic and green product! If buying a product help
the environment, I will buy it, why not.
Appendix B