Mainland carmaker Geely is scaling back an ambitious plan to use Malaysia as a manufacturing springboard due to sales restrictions imposed recently by Kuala Lumpur.
The Malaysian government announced last month that foreign carmakers could build cars locally, but only if they exported 80 per cent of their output and earmark the rest for domestic sales.
The new guideline effectively trashes Geely's plan to build a Southeast Asian business anchored on strong domestic sales in Malaysia and complemented by exports.
Hong Kong-listed Geely, which will announce its full-year results on April 21, originally aimed to make 30,000 cars in Malaysia next year. That target has now been scaled back to 10,000.
Grace Mak, an automotive sector analyst at Merrill Lynch, said the Malaysian market would have provided 'a more straightforward starting point for Geely's export business in Southeast Asia', amid plans to lower vehicle export tariffs among members of Asean.
But some industry observers say Geely may not benefit from this due to its high production costs.
