Proton is turning 30 but doesn’t have much to celebrate

Proton will be turning the big 3-0 next Tuesday, but we wonder how heartfelt the celebrations are really going to be. Proton has fallen to an all-time low, having lost its number one position to the other domestic carmaker, Perodua, some time ago and continued to steadily lose market share to about only 17% presently. In April, when the car market slowed dramatically after the implementation of the GST, Proton’s sales fell so steeply that the automaker’s ranking fell to fourth place. It is hard to imagine that once upon a time ago, for every two cars sold, one bore the Proton marque.

One of the Malaysian national carmaker’s biggest problems is the perception of appalling quality, which plagued earlier models, and continues to persist until today. “People don’t forget. Bad things they don’t forget. Good things they forget,” said Proton Chairman, Tun Dr Mahathir Mohamed. According to him, Proton takes quality issues very seriously now. In the past, only one out of 40 cars were tested before being released to the consumers; today, all cars are tested, and there are quality stations at multiple intervals throughout the assembly process, where the cars are checked.

Three new models are slated for launch next year, but they will suffer the same lacklustre sales as the Iriz, which was intended to be the savior of this foundering company, if this issue is not fully addressed.

Proton’s Shah Alam and Tanjung Malim plants have a combined capacity of 370,000 cars, but only around 120,000 rolled off the assembly lines last year. The company is banking on the new models to fill up the capacity and boost profitability, but even that will not be enough. So Proton is collaborating with Suzuki to assemble between 60,000 to 100,000 cars for the Japanese automaker. The strategic collaboration will also involve technology transfer, with Proton gaining access to Suzuki’s platforms, power train and other automotive advances. Proton’s greatest rival, Perodua, has found success in its collaboration with Daihatsu and Proton once thrived when it was in partnership with Mitsubishi. So, maybe a partnership with a foreign automaker is the winning formula.

The ever-vocal Mahathir recently hit out at calls to liberise the Malaysian automotive industry.

“A hundred thousand or so workers, engineers and managers will lose their jobs. Their families will suffer,” he wrote on his blog, “But that is alright, because the consumers will get better cars at lower prices from foreign countries.” If you are not familiar with Dr M’s style, he was of course being sarcastic. Also, that number might be a hyperbole for according to Abdul Harith Abdullah, CEO of Proton, some 77,000 livelihoods are directly linked to Proton; still a significant number, nonetheless.

But even with the protectionism policies which Dr M had put in place during his reign, Proton appears to be heading towards its inevitable conclusion; maybe it’s better to just pull the plug than to suffer a drawn-out moribund existence.

image: The Malaysian Insider

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