The middle of August 2016 will go down in Malaysian Automotive history as a black spot. We have Suzuki closing its motorcycle assembly plant here in Malaysia and the Automobile Association of Malaysia's (AAM) operations crashing to a halt. Suzuki states that there is weak local demand for their small CKD products and AAM have not paid their employees over the past 4 months with a lot of their offices closed. These two are just a few changes happening to our Malaysian economy as a whole.
What I can confirm is that the economy is in a slowdown at the moment. There may be certain companies making huge sales numbers like Perodua at the bottom end of the scale and Mercedes-Benz at the other end, but everyone else seems to be getting hit but lackluster sales. If not, news like the two mentioned above would not have happened. Even AAM, a company with a heck of a heritage behind it is in shambles. AAM was established in 1932 and actually takes after the British AA (founded in 1905). They are supposed to be recognised as the national motoring authority, acting as the official spokesperson for Malaysian motor vehicle owners, and championing their rights to the safe and adequate use of roads. The AAM is also the national motorsports' governing body giving out racing licences and so on. It is an establishment that existed around the time the first cars were sold or driven by the general public in historical Malaya as well as in Borneo. Even my father was a member back in the day.
However, what has happened is that the news had reported that the company had not been able to pay its staff for about four months and had closed four branches (Sarawak, Negeri Sembilan ( Seremban ), Kedah (Sungai Petani ) and Malacca over the past six months or so. Then a day later, in a daily newspaper, it was reported that AAM had announced it will be downsizing its operations to meet challenges of “market situation” and “general economic slowdown”. This is heartbreaking in so many ways. But somehow it was to be expected.
You see, I believe that ever since the mid 1990s AAM has been on a slow and steady decline. They have not had too many members. I believe the peak of it was in the 1980s. They even had their own monthly magazine that they distributed to their members. They operated towing services (had their own tow trucks), battery delivery services (had their own cars and bikes to do field maintenance work), short maintenance courses and as stated above, a whole lot with their own vehicles. But they have not adapted with the times.
In the mid to late 1990s, insurance companies started providing value added services to their customers. This meant that if your car was covered by XXX Insurance Co., they provided 24 hour towing services. This meant that many people did not need to become AAM members. The insurance companies were providing towing facilities. So not many wanted to become members.
By the early 2000s, web based publishing was gaining a foothold and now, nearly everyone stopped subscribing to magazines and rely on free-based online publications (like this one - so advertising now comes in so many online forms). So the AAM magazine wasn't something that people looked forward to. The AAM annual handbook which states the addresses of service stations, garages, hotels, places of interest wasn't really needed as everyone could just go online and get everything they wanted. So no one wanted to become members.
And in the later part of 00's, battery companies or their dealers started to advertise that they had battery changing or assist services. Battery companies were providing value added services by going direct to the customers and they have their agents change a flat battery of a customer in need under 45 minutes. My entire family actually have used this service many times. And this again, is free of charge. There is no need to become an AAM member.
There are many other things that make AAM an extinct dinosaur. Another is the fact that they did not downsize early when all of this was happening. They still maintained large staff at their branches as well as all the equipment and vehicles they had. All of the branches had their own tow trucks, motorcycles and other overheads to maintain even when revenue was slipping. They should have just sold off their tow trucks and engaged workshop operators who have tow trucks like what insurance companies usually do and saved on maintenance and overheads like monthly repayments on the truck's lease. They could have outsourced many of their services which the insurance and battery companies do. But they did not. Even the yearly government grant that they receive could dig them out of the hole.
I suppose it is some sort of complacency. Their website has not been updated long before the shit hit the fan. Their motorsports calendar is stuck in the year 2014. Their last press clipping was from July 2015. Their last blog entry was from September 2014 and their last Facebook entry was in November 2015. So basically AAM was already dead at the end of 2015. It is now the end of August 2016. And early this morning, I received an online message on the motoring-malaysia Facebook page that someone was trying to call AAM up and no one picked up the call.
R.I.P for the moment I think. Restructuring will take awhile.
Anyway, AAM has not been adapting to the times. So they've bled themselves dry. Let's look at what the AA in the UK is doing.
In 2007 the AA merged with Saga to form Acromas Holdings.
Saga is a British company focused on serving the needs of those aged 50 and over. It has 2.7 million customers. The company operates from several sites.
Saga's operations include:
Saga Holidays provides package holidays and tours across the globe. It owns and operates the cruise ships MS Saga Pearl and MS Saga Sapphire and also owns and operates the Bel Jou Hotel in St Lucia, as well as Titan Travel.
Saga Services provides a wide range of Insurance products - Motor, Home, Travel, Caravan, Commercial Van, Pet, Private Medical, Life Insurance, Motorhome and legal services.
Saga Personal Finance provides savings accounts, credit cards, travel money, financial advice, equity release, share dealing, annuities, life assurance & long term care funding advice.
So with SAGA, the AA provides a whole lot of stuff but they use Saga's facilities and expertise to do so. And people over 50 prefer a one-stop center instead of the younger tech savvy people. So the AA benefits from this.
AA Cars partnership with Vcars
In July 2013, the company launched AA Cars, linking buyers of used cars with sellers. The service is a partnership with Vcars, rebranding its partner's existing online service and providing a check of the car's history. At the time of rebranding over 110,000 cars were available for purchase via 2,000 registered dealers.
They've gone ONLINE in a big way. It's like AAM taking over or JV with something like Carlist or Mudah. And our AAM definitely did not do so.
Going Public Listed
The AA became listed on the London Stock Exchange in June 2014 through an initial public offering.
I mean honestly. AA UK is a public listed entity on the London Stock Exchange. That alone speaks volumes. An Eleven Hundred on the scale compared to the AAM. This is so pathetic.
Buys an online booking service in 2015
In 2015, The AA acquired the garage booking service Motoriety.
They've not slowed down in what they can do. They have found out that these days, everything needs to be done via the internet. The internet is the place to do everything. If people want to find a petrol station they go on the internet. If they want to find a hotel they go to the internet. If they want to find a highway R&R they do not wait for the signboard to appear on the roadside as they've already Googled it and know there's one coming in about half and hour on Waze. The internet is everything and the AA know how to capitalise on it.
They're Public Listed for God's Sake!!!!! It is all about keeping up with the times and being innovative so that people think it is worthwhile being a member of the AA.
And now you know why AAM has died. Need I say more?
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