This article first appeared in The Edge Malaysia Weekly on December 18, 2017 - December 24, 2017

TWO Malaysian outfits — the Sunway Group and Quill Group — and a Singaporean company, Wearnes Automotive Pte Ltd, are understood to be bidding for the McLaren automotive franchise in Malaysia.

“It’s actually a two-horse race — Quill and Sunway. While some in the know say Sunway has already bagged it, we hear a decision has yet to be made. So, it’s still open,” a source from the automotive industry says. It seems that Wearnes has put in a bid, which is not very competitive, but its details are scarce.

Both Sunway and Quill did not respond to questions from The Edge.

Sime Darby Auto Britannia Sdn Bhd, a 75% unit of Sime Darby Bhd, had held the McLaren franchise since mid-2013, but is understood to have given it up a few months ago as it did not fit in with the conglomerate’s long-term automotive strategy.

“The super-premium segment such as McLaren requires a nimble player, one with the appropriate assets such as well-located buildings, shopping centres and the like. I think McLaren was not a good fit for Sime Darby,” the source says.

A company search reveals that the remaining 25% stake in Sime Darby Auto Britannia is held by Tan Sri Mokhzani Mahathir via his private vehicle, Mahawarga Holdings Sdn Bhd.

It is not known if Sunway and Quill plan to go at it alone or partner someone to handle the supercar franchise.

McLaren had, under Sime Darby, set up a showroom in Mutiara Damansara and a service centre in Glenmarie, but the brand did not do well.

When the showroom was launched, it was the marque’s 41st globally in a span of two years, which goes to show how aggressive the British luxury and sports car maker was. Other than in Kuala Lumpur, Sime Darby also took the franchise for Hong Kong and Shanghai.

In its financial year ended December 2015, Sime Darby Auto Britannia suffered an after-tax loss of RM4.77 million on revenue of RM20.42 million.

As at end-December 2015, it had total assets of RM27.11 million and total liabilities of RM35.73 million. It had accumulated losses of RM11.62 million as at end-2015.

For Quill, the attempt at bagging the McLaren franchise is understandable as it already has an automotive arm — Quill Automobiles Sdn Bhd — which secured the BMW dealership in January 2009 and is operating a service centre in Petaling Jaya.

In 2010, Quill Motorcars Sdn Bhd was awarded a Roll-Royce distributorship and dealership.

“So, McLaren is in the same vein, I guess ... an upmarket car, an expensive car — the niche market that Quill seeks to be involved in,” says a car industry executive.

Quill is also understood to be aggressively looking at expanding its footprint and strengthening its management line-up.

While it is clear why Quill is after the McLaren franchise, Sunway’s position is not so. Considering the automotive industry is facing razor-thin margins and challenging sales numbers, the reason Sunway is venturing into the business is anyone’s guess.

The Malaysian Automotive Association has forecast total automotive sales volume of 590,000 units for 2017, a mere 1.7% year-on-year increase, due to the moderating economy, cautious sentiment and lower consumer spending, among others.

Last year, the total industry volume fell below the 600,000 mark for the first time in six years, down 13%, or 86,553 units, to 580,124 units.

But then again, the supercar segment is a very different market.

Sunway has businesses in property, leisure, construction, building materials, quarry, trading, manufacturing, education and healthcare, to name but a few.

Among its listed entities is Sunway Bhd, which is 60% controlled by Tan Sri Jeffrey Cheah Fook Ling via his flagship Sungei Way Corp Sdn Bhd. Other listed entities include Sunway Real Estate Investment Trust (Sunway REIT) and Sunway Construction Group Bhd (SunCon).

Sunway has a 54.42% stake in SunCon and 37.34% of Sunway REIT.

For its nine months ended Sept 30, Sunway posted a net profit of RM455.71 million on revenue of RM3.65 billion.

As at end-September, Sunway had cash and bank balances and placement in funds of almost RM5.23 billion. On the other side of the balance sheet, it had short-term debt commitments of RM4.92 billion and long-term borrowings of RM3.29 billion.

While many are wondering what Sunway’s plans are, one market watcher says it may hinge on the plans for the Fastrack race circuit in Iskandar, Johor, which involves a 4.45km track that is FIA Grade 1 and FIM Grade A-certified, which means that it is capable of hosting top-tier Formula 1 and MotoGP races.

The project, which is scheduled for completion in 2019, is valued at RM3.5 billion, and is a joint venture between Fastrack Autosports — a 70% unit of Singaporean billionaire Peter Lim, who is partnering the Johor royal family — and UEM Sunrise Bhd.

“Sunway has more than 1,000 acres in Iskandar and could be working with Peter Lim and others. Having McLaren under its belt could be synergistic,” the market watcher says.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.