KUALA LUMPUR (June 20): Tan Chong Motor Holdings Bhd has been appointed sole and exclusive distributor, assembler and after-sales service provider of King Long coaches and buses in Malaysia.

King Long specialises in the design, production and sale of various buses, minibuses and coaches. It has three manufacturing bases in China and produces 25,000 buses and coaches, as well as 30,000 mini vans per year.

In a filing with Bursa Malaysia today, Tan Chong Motor said its wholly-owned subsidiary TC Trucks Sales Sdn Bhd has entered into an exclusive distributorship agreement with China's Xiamen King Long United Automotive Industry Co Ltd for the appointment. TC Trucks Sales will also be responsible for the sale and distribution of King Long spare parts.

TC Trucks Sales is expected to start sales of King Long products in the fourth quarter of this year.

The working capital required for the new King Long business for the first five years of operation is estimated at RM6.5 million, which will be funded by internal funds, said Tan Chong Motor.

The initial term of the agreement will be for five years and may be extended subject to the parties' mutual written agreement.

"The parties will commence negotiation on the terms governing such renewal at least six months prior to the expiry of the initial term," said Tan Chong Motor.

It added that King Long is a renowned bus manufacturer with a complete range of buses and coaches that facilitates Tan Chong Motor’s penetration into different bus or coach segment in Malaysia and Vietnam.

Tan Chong Motor, via another wholly-owned subsidiary TC Motor Vietnam Co Ltd (TCMV), had on Jan 10 entered into an exclusive distributorship agreement with King Long, where TCMV has been appointed as King Long’s sole and exclusive distributor, assembler and after-sales service provider of the XMQ6829Y King Long coach model in Vietnam.     

"King Long is familiar with the Malaysian sales and after sales regulations and market situation. It has gained the experience via its participation in local tender through their previous distributor in Malaysia where it has been able to obtain and comply with the strict tender requirements," said Tan Chong Motor.

"As a well-established bus manufacturer, King Long is manned by experienced personnel and dedicated support team for the after-sales services. Its commitment to the Malaysian market is portrayed through its stationing of a service engineer here to serve all King Long’s customers in Malaysia," it added.

Tan Chong Motor also noted that the King Long business will not contribute significantly to its revenue and profit for the financial year ending Dec 31, 2018, but is expected to contribute positively to the group's earnings in the long term.

Shares of Tan Chong Motor closed up two sen or 1.1% at RM1.84 today, giving it a market capitalisation of RM1.2 billion.