Malaysians Not Keen On Made-in-Malaysia Cars

Namely Proton cars. So says Proton.

Proton Chairman, Tan Sri Mohd Khamil Jamil, recently bemoaned the lack of Malaysian support for the national automaker’s vehicles in a media interview. “I don’t understand why Malaysians are not supporting Proton,” he said to the Business Times last week, citing other countries like Japan and South Korea, which citizens are supportive of vehicles produced by their respective local marques.

According to the Malaysian Automotive Association, Proton’s 2013 domestic sales reached 138,753 vehicles, which is 21.2% of the total market share (or 24.1% of the passenger car market). However, this number had steadily dropped from 25% in 2010 to 22.5% in 2012, and a further reduction last year. The decline in 2013 raises more concerns as Proton had introduced two well-reviewed models – the Proton Preve and Suprima S – which should have helped boost sales.

Khamil attributed the lack of local support to competition from foreign marques further amplified by negative public perception towards the Proton brand, on top of high cost and lack of economy of scale when manufacturing locally.

“Proton is for everybody. Many urbanites are buying Proton cars as they believe in the product and technology. But still, there are people who say our cars are expensive as they are locally produced. It is quite impossible to lower car prices with the rising costs of doing business,” Khamil explained. According to him, the nett profit of a Proton Saga SV is less than MYR500, a revelation that was shocking to many. In an effort to increase the profit margin, Proton is looking to standardise the automotive parts used and effectively lower the cost base for all models.

After facing backlash for his remarks, Khamil sang a slightly different tune at another public event a few days later: “Those comments were taken out of context. We are appreciative of support from the public, without which Proton will not be where it is now.”

Currently, Proton vehicles are available in 25 countries but revenue from international sales remains unimpressive, at a mere 5%. The Malaysian automaker has aspired but failed to developed its international markets. In 2010, the company forecast that export volume would double to 40,000 cars by the financial year-end in March 2011, with a goal of exporting 50% of its total production, more than double the then export percentage. When the financial year ended, exports had only increased by 10% and the export volume remained relatively unchanged.

The Preve received good reviews
but failed to boost sales significantly

In 2009, Proton announced that it would break into the Indian market by 2011. It is now three years past the deadline, and this has yet to occur. In Thailand, the Malaysian automaker sold 5,530 units in 2010 and 3,305 units in 2012. When the Proton Preve was launched in the Kingdom in 2012, Proton announced that its 2013 sales would exceed 3,000 units. Well, the year has come and gone, and sales did not even breach the four-digit mark, with only 697 cars sold.

What about the largest car market at present time? Although Proton has made its way into China, it does so anonymously by providing complete-knock-down kits of the Gen 2 and Persona to the China Youngman Automobile Group, which sells the two models, renamed L3 GT and L3, under the Lotus marque (owned by Proton). Youngman also collaborated with Lotus Engineering to develop the L5, L5 GTS and T5, and the rights to these three models belong to the Chinese automotive company.

Proton’s advisor, Tun Dr Mahathir Mohamad, also spoke to Business Times and was quoted as saying, “The presence of Lotus in China will contribute to developing Proton in the Chinese market. However, to enter the Chinese market, we need to manufacture the cars in China and that will involve huge capital investments. We are looking at partnerships.”

Let’s look Down Under. Proton sales in Australia reached a high in 2007 with 2,336 units. When the Preve was launched there in 2012, Proton doubled its 2013 sales target to 4,000 vehicles, but data from the Federal Chambers of Automotive Industries showed that only 611 cars were eventually sold, a measly 15% of its sales target.

From Proton’s international track record, it is easy to see that the Malaysian automaker sets lofty goals without a clear idea of how to go about achieving them, and often falling short (very, very, we might add). Recently, Proton announced that it will be restructuring its operations and reassessing its export strategy. With the domestic market becoming saturated and the country's obligation to adhere to the ASEAN and WTO free trade agreements, let's hope it is not too late for Proton to buck up and tackle the problem effectively.

images: malaysianinsiders.com, harianblogger.com