DRB-Hicom confirms Audi to take back franchise, confident of retaining the dealership

PETALING JAYA: DRB-Hicom Bhd yesterday confirmed Audi AG's plan to take back the franchise currently run by the group in Malaysia, even though an official handover date has not been finalised.

DRB-Hicom Automotive Distribution & Manufacturing senior group director Datuk Radzaif Mohamed told selected media yesterday that while the group has been informed of "the start of the transition" for Audi to take over the wholesale operations of the brand, an official handover date has not been decided.

He did not say if such a handover is likely to happen by the end of the year, saying that "some details need to be ironed out".

According to a source, however, Audi is likely to takeover the franchise sooner rather than later.

It is understood that the Volkswagen showroom at its headquarters in Bangsar, Kuala Lumpur, which has been under renovation for some months now, is due to open its doors again today as Audi Malaysia's office for newly appointed staff to move in.

Calling it a natural progression for the principal brand owner to come in once it has established a brand presence in a market, Radzaif said the group is confident that it will retain the dealership for Audi cars under the new arrangement.

"If you look at the likes of BMW, and Honda, it is only natural for the principal to now look at how else they can support the local market going forward," he said.

Denying that bad blood led to the decision by Audi to take over the franchise, Radzaif said Audi's plan to take over the franchise is something the group has always been aware of and that it has always been "a matter of when".

He added that the group is unlikely to see much of a financial impact from the reduced role, as the introduction of new models is likely to cushion the loss in wholesale margins it will see with Audi taking back the franchise.

This year alone, the group has launched two new models, A3 and an updated A8. It is also due to launch the A6 and A4 next year.

Currently DRB-Hicom through subsidiary Euromobil Sdn Bhd imports, distributes and provides after-sale service for completely built-up units (CBUs) of the Audi brand here.

A check with the Companies Commission Malaysia (SSM) showed that Euromobil Sdn Bhd, the subsidiary entrusted with the franchise, made a net profit of RM52.4 million on revenue of RM492 million for the financial year ended March 31, 2013.

As the exclusive distributor since February 2010, Euromobil did well in 2013 by more than doubling Audi car sales to 3,102 units, driven by the huge success of the A6 Hybrid, which accounted for 1,907 units sold. However, following the discontinuation of tax exemption for the A6 Hybrid in 2014, Audi sales in Malaysia declined by 36.4% to 814 units year-on-year for the first half of 2014.

Radzaif said DRB-Hicom sees the upcoming presence of the Audi principal owner as positive, enabling it to focus on growing the Audi dealership and leaving the bulk of advertising and promotional spending to the principal.

Euromobil currently runs six Audi showroom and service centres.