Strategic Leadership Propelling Volkswagen Group's Regional Growth in South-East Asia
Volkswagen Group has made strategic moves to bolster its presence in South-East Asia, with a particular focus on Malaysia. Dr Susanne Lehmann, appointed to lead the company's operations in Malaysia in January 2024, is spearheading these efforts.
Lehmann's mission is not limited to Malaysia alone, but extends across the ASEAN region. She sees potential in leveraging regional suppliers and collaboration, particularly in electronics manufacturing, which could support local production of sensors, ECUs, and chips vital to EVs and digital vehicle systems.
Audi's production of the Q7 SUV at the DRB-Hicom plant in Malaysia creates shared localisation opportunities. This production, along with Volkswagen's plant in Pekan, which produces Volkswagen, Audi, and Porsche cars, as well as MAN and Scania trucks, forms a strong foundation for the company's operations in the region.
Volkswagen Group's strategy in South-East Asia is rooted in localisation, cross-border integration, and pragmatic ambition. The company collaborates closely with group companies on shared systems for waste management, port handling, logistics, and supplier engagement. An example of this collaboration is the relocation of Volkswagen's aftersales parts distribution centre for Asia-Pacific from Singapore to Port of Tanjung Pelepas, Malaysia in 2019.
The carmaker has been exploring the potential to increase sourcing and trade with partners in China, especially for EVs and battery supply chains. However, Lehmann points to technical standards as a regulatory barrier in ASEAN, with costly adaptation for each new market. To overcome this, she calls for collaboration between logistics partners and tier suppliers to provide cost-competitive, future-ready solutions.
Malaysia's recent decision to remove anti-dumping tariffs on Vietnamese steel is an example of governments beginning to respond to regional collaboration. The country has set ambitious targets for electrification, backed by import duty and tax exemptions to spur both demand and local manufacturing. With these measures, Malaysia's EV penetration currently stands at 5.4%, lower than Thailand's 23% of new car sales.
Thailand and Indonesia are emerging as regional EV manufacturing hubs. Lehmann sees an opportunity for a multi-country logistics strategy within ASEAN, balancing EV hubs like Thailand with ICE model production in Malaysia. She believes Malaysia's strength in electronics manufacturing could support more local production of EV components and batteries, and Volkswagen is already collaborating with regional partners to achieve this goal.
However, Volkswagen Group faces challenges in managing a long, complex, and relatively low scale supply chain for Malaysia and South-East Asia. To grow and compete more strongly both in Malaysia and wider South-East Asia, the company must leverage regional scale in the supply chain, including more local sourcing.
Porsche also operates a local assembly facility in Malaysia, which demonstrates the group's strategic commitment to the country as a manufacturing node. Lehmann emphasizes the importance of policy alignment for long-term success in the region and is working to deepen regional integration further, starting with how Volkswagen sources parts both for production and aftersales parts.
Volkswagen is positioning Malaysia not in competition with EV-focused markets like Thailand, but as a complement, continuing ICE vehicle production. From 2026, Volkswagen plans to export vehicles produced in Malaysia to other ASEAN countries, but specific partner companies and exact vehicle models manufactured locally have not been explicitly named in the available information.
Lehmann sees potential in leveraging regional suppliers across South-East Asia and believes that collaboration is key to overcoming regulatory barriers and achieving cost-competitive, future-ready solutions. With her leadership, Volkswagen Group is poised to make significant strides in the South-East Asian market.
