I would like to congratulate Naza Motors on the official launch of Naza Ria by Malaysia'sautomotive icon, Dr Mahathir Mohamad.

The launch of Malaysia's first multi-purpose vehicle (MPV) is another milestone in 'Malaysia Boleh'. Though both Perodua and Proton can claim to be the pioneers of introducing Malaysia's first MPV - Rusa and Juara respectively - Naza can be proud of producing a relatively better MPV.

The fact remains that Rusa is modeled after a Daihatsu variant, Juara is after Mitsubishi's T-Box, and Ria is after Kia Carnival. Is this an achievement that we can really be proud of?

It is quite interesting to see what Naza's product development strategies might be in the next couple of years. Are they going to follow their big brothers with 'cut and paste' technology? Or, are they going to come up with the so called 'cosmetic changes' (CC) of an existing model year after year? I strongly believe that if Naza can follow the trends set by Proton in having cosmetic changes ie. CC1 to CC infinity; Naza can prosper well during post-Afta period.

As a customer, the expectation is to see price cut every time changes are made. One of the rationales for price discounts as new model/new cosmetic changes are introduced is that better technology is deployed increasing efficiency and reducing development and production costs. Naza Kia has been very successful with competitive pricing. Naza has offered various models sold at around RM140,000 to RM160,000 during the introduction period. That equivalent model can now be obtained at less than RM100,000.

Nobody knows how they manage to reduce their prices drastically considering being a relatively new player in the non-luxury passenger car market.

Has anyone wondered why, despite having so many cosmetic changes to Proton Saga and subsequently the Proton Iswara, that prices have never changed significantly?

One of the accounting theory of automotive product costing is the rule of amortisation. In order to obtain the production cost of each model, fixed investments such as tools, jigs, and engineering costs are taken into consideration. For example, if those fixed costs are calculated at RM100,000 to produce 100,000 units of cars, the proportionate cost per car is RM 1.

As those fixed costs have been fully recovered after the 100,000th car is rolled out, the subsequent car produced is 'free' from those costs. Since Proton has rolled out more than 1,000,000 cars, I wonder how the customers have benefited from the so-called cost reductions.

I believe that Proton Saga and Iswara have reached a few folds of break even points for the initial investments put in since 1985. The logic is that the price of the present Iswara should be further reduced to the benefits of the customers.

Do the customers receive discounts as a domino effect of Proton's ability to reduce the fixed costs? Or, do the customers willingly allow their money to be spent by Proton on non-development related activities such as unnecessary sponsorships?

Let's hope that our automotive industry will be more dynamic in all aspects particularly product development and prudent cost management. All automotive players have to prove the critics wrong that there will be dark days after Dr Mahathir leaves Putrajaya in October 2003.