Sime Darby, Malaysia's industrial and automotive conglomerate, is looking to set up a luxury car retail business in India and expand in Indonesia to tap into the growth potential of both economies, its top executive told Reuters.
"We cannot ignore India," Group Chief Executive Officer Jeffri Salim Davidson told Reuters.
"It's just something too big, you cannot ignore. So we're looking for opportunities in India to see whether we can do something with a local partner and start a car retail business there," he added. India, the world's most populous country, is its fifth-largest economy.
Jeffri said Sime Darby also plans to expand in Indonesia, Southeast Asia's largest economy, following a joint venture with a local firm to sell BMW cars in Jakarta and Medan.
Sime Darby, which derives 35% of its revenue from China, sees demand for luxury cars there remaining strong despite slowing economic growth. "Chinese people have money, they still buy cars," Jeffri said. "The problem in China is not the demand problem, it's a supply problem."
Jeffri said car makers in China ramped up production in the hopes of gaining market share post-pandemic, creating a supply imbalance which prompted manufacturers to cut prices, squeezing the profit margins of retail distributors.
Sime Darby was founded in 1910 and is one of Malaysia's oldest conglomerates with businesses spanning plantations to manufacturing. It currently has operations in 17 countries.
It spun off its palm oil and property businesses in 2017, and had divested other businesses including Ramsay Sime Darby Health Care which was sold off this month.
Sime Darby now focuses on industrial and motor businesses, including assembling Porsche cars in Malaysia and distributing BYD electric vehicles in Malaysia and Singapore.
In August, it announced the acquisition of a 61.2% stake in Malaysian automotive-to-manufacturing company UMW Holdings - which assembles Toyota cars in Malaysia and owns a stake in local car maker Perodua - for 3.57 billion ringgit ($767.41 million).
Jeffri said the deal will make Sime Darby the biggest automotive player in Malaysia, capturing over 50% of the country's automotive market.
"We very much play largely in the luxury segment," he said. "By doing this, we suddenly play in the mass market... so suddenly, we're all the way through the value chain."
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