Proton's Chairman Laments Lack Of Support From Malaysians, Aims To Ramp Up Exports

Competition from foreign car makers, poor public perception, lack of economies of scale and the high cost of manufacturing vehicles locally are the reasons behind Proton's drop in vehicle sales, said Proton chairman Tan Sri Mohd Khamil Jamil to the Business Times yesterday.

According to the business daily, Proton cars are currently sold in more than 25 countries but revenue contribution from export sales remains below five per cent.

Data compiled by the Malaysian Automotive Association puts Proton's total vehicle sales in Malaysia for 2013 at 138,753 units, with a total market share 21.2 per cent (or 24.1 per cent of Malaysia's total passenger cars market). This was down from 22.5 per cent in 2012 and 25.9 per cent in 2010.

This was despite the fact that Proton has introduced two new global models; the Proton Preve and Suprima S.

The Proton chairman told Business Times that competition from foreign car makers and public perception has caused total vehicle sales to drop. 

Khamil said, “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."

He also lamented on the lack of support from Malaysians to buy Proton products. “Look at the Japanese and how they are supporting their carmakers. Another example is South Korea, which supports local players like Samsung and Daewoo. I don’t understand why Malaysians are not supporting Proton,” said Khamil.

He also added that without sufficient economies of scale, it is difficult for Proton cars to be priced competitively, adding the nett profit of a Proton Saga SV is a shockingly low, below RM500.

Khamil says Proton is looking to lower its cost base by promoting greater standardisation of the automotive parts used.

“This will give us economies of scale which will eventually lower costs. Our profits are shrinking with rising costs. For the new Saga SV 1.3, the nett profit is below RM500 and it is shocking," he said.

The business daily also adds that Proton hopes to increase exports by focusing on its core markets - the United Kingdom, Australia and Egypt, but did not elaborate any further.

Last Wednesday, the business daily also quoted Proton's adviser Tun Dr Mahathir Mohamad 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."

Presently, Proton's namesake brand has no direct presence in China. It sells completely knocked down (CKD) kits of the Gen.2 and Persona to Chinese carmaker Youngman, who then sells the models under the Lotus brand, as the Lotus L3 GT and Lotus L3 respectively.

Youngman also sells three more models developed in collaboration with Lotus Engineering (not Lotus Cars) - the L5, L5 GTS and T5. The rights to these three models belong to Youngman and not Proton.

Earlier this year, our sister publication, Carlist.my's Automotive Industry Review Issue 002 took a look at Proton's export ambitions. Proton aims to export 150,000 cars by 2018. You can download a copy for free here.

Below is a summary of Proton's recent export initiatives:

Export Targets

In 2010, the company announced in their annual report that its export volume was forecasted to more than double to 40,000 cars by the end of financial year ending in March 2011. The managing director at the time also said that Proton aimed to export 50 per cent of its total production (up from 24 per cent).

By March 2011, Proton’s exports grew by only 10 per cent and Proton’s export volume has more or less remained at the same level since 2010.

Entry To India

In December 2009, Proton announced that it would be entering the lucrative Indian market by 2011. This did not materialise.

Export Targets for Thailand

When launching the Proton Preve in Thailand in November 2012, Proton announced that it will raise its sales targets for 2013 to be 'upwards of 3,000 units.' The company sold only 697 cars in 2013.

That’s a shocking 79 per cent drop from 2012’s 3,305 units, and an 87 per cent drop from its peak of 5,530 cars in 2010.

Distributor Phra Nakorn Automobile Group also told us that 'not much has happened' since the formation of Proton Cars Thailand, which we understand is now inactive. Phra Nakorn is now concentrating on selling Honda cars.

Export Targets for Australia

When Proton launched the Preve in Australia in October 2012, the company raised its sales target for 2013 from 2,000 cars to 4,000 cars. This was despite the fact that Proton was already seriously underachieving in its calendar year 2012’s targets, ending the year 50 per cent below target.

Data from Australia’s Federal Chambers of Automotive Industries showed that Proton ended 2013 with only 611 cars being sold, 40 per cent lower than 2012.

Proton’s sales in Australia peaked in 2007, when it sold 2,336 units. 36 per cent of the sales were contributed by the Arena, followed closely behind by the Savvy.    

You might also be interested to read: Buy A Proton: Save Malaysia's Auto Sector. Did Japan Succeed The Same Way?