DNC Asiatic Holdings Sdn Bhd will invest RM20mil in a new assembly plant for motorcycles in Sri Lanka to boost production.

The 51:49 Malaysia-China joint venture, which expanded to Sri Lanka in 2012, is the first company in that country to manufacture motorcycles. It currently operates an assembly plant in a leased factory.

DNC Asiatic group general manager Lim Boo Hiong said construction works for the proposed assembly plant with installed production capacity of 80,000 units per annum were expected to commence in three months.

He said about RM10mil would be invested in the first of the three-phase development on 4ha located about 15km from capital city Colombo. Phase 1 is expected to be commissioned in 12 months.

“When operational, the new assembly plant will produce engine chassis and plastic cover parts for various types of motorbikes. Some of the components of the motorcycles will be contracted out to local vendors,” he told StarBiz.

DNC Asiatic, which owns assembly plants in Demak Laut Industrial Park here and in Batu Caves, Selangor, manufactures and markets some 15 models of motorcycles, including street bikes, scramblers and scooters, under the brand name Demak.

Lim said the company doubled its motorcycle sales in Sri Lanka to 2,000 units last year and had targetted to sell 5,000 units this year.

“We are now selling about 10 models of Demak motorcycles with engine capacity ranging from 80cc to 200cc in Sri Lanka. The most popular models are the street bike and scrambler priced between RM3,000 and RM8,000.

“Unlike Malaysians who are concerned about performance of motorcycles, Sri Lankans want efficiency in motorcyle fuel consumption because petrol there is much more expensive than Malaysia,” he said.

He said the company was developing certain models that suited the preference and needs of Sri Lankans, and meet the local road requirements.

DNC Asiatic is also developing three wheelers for the Sri Lankan market. Three wheelers, which are imported mainly from India, are popular in Sri Lanka.

Lim sees big growth potentials in the Sri Lankan market for DNC Asiatic as more locals there could afford to buy motorcycles due to increase in individual and household incomes. Bicycles are now the main transport for many Sri Lankans.

According to him, Sri Lanka’s annual sales of motorcycles are around 200,000 units and the bulk of the motorbikes are imported from India.

Lim said the company would increase the number of Demak mega showrooms to 10 in major Sri Lankan cities from three currently in the next three months. These showrooms double as after-sale service centres. There are currently about 100 dealers for Demak motorcycles there.

On DNC Asiatic’s Malaysian operations, Lim said its assembly plant in Batu Caves would be relocated to the new RM45mil assembly complex in Kuala Langat, Selangor, next month.

Installation of machinery and equipment is currently underway at the new complex, which has three factories, a research and development centre and a training centre. It will also house the company’s corporate office.

“The new assembly plant has an installed production capacity of 200,000 units of Demark motorcycles per annum. It will start to produce motorcycle engine chassis and plastic cover parts as the local vendor is unable to cope with the increasing volume.”

The motorcycle engine chassis are currently imported from China.

Lim said DNC Asiatic sold about 44,000 units of Demak motorbikes last year, up from RM30,000 in 2012. This year’s target is around 70,000 units.

The assembly plant here, which has an annual production capacity of 100,000 units, caters for the Sarawak and Sabah markets.

DNC Asiatic has launched two new models – Demak Skyline and Demak ATM (both 200cc street bike) for the Malaysian market this year. According to Lim, two more new models would be unveiled in second half of this year.

The Star Online