Monday, July 12, 2010

Proton Celebrates 25 Years

Yesterday, Ahmad Talib’s column in the New Sunday Times hosted the headline “Proton does Malaysia proud”. He was writing about Proton’s success as they celebrate their silver jubilee this year. No doubt this success is reflected in Malaysia’s ability to assemble, design, make and produce cars. As Proton prime mover, Mahathir Mohamad said “The idea of a national car is not to beat our chest. We want to modernize our country through skills development” (Webpage http://paultan.org/2005/06/14/negative-image-hurting-proton-sales/, accessed today). But at what price?

Since their inception, Proton are protected and shielded – they have been the recipient of tax breaks and “other government incentives”. E.g. The national carmaker’s annual report showed that they received a grant amounting to RM193.7 million for the FY2008 period (The Edge Malaysia, June 07-13, 2010). Additionally, import duties and taxes were levied against foreign carmakers. What the government did was to jack up the import duties of all non-Malaysian cars by between 40%-300%, thus making the latter much more expensive to buy. So, that way, even if the price of Proton is raised – and the company can further augment profits – people will still feel it is cheaper to buy a Proton. This made Proton uncompetitive – they know they can come up with a wreck to sell and Malaysians will be forced to buy it.

The government claimed this is needed because Proton have a job to do to build up the automotive and engineering capability of Malaysia. And to do that, Malaysians had to endure high car prices that are of poor quality! E.g. The JD Power Asia Pacific 2003 Malaysia Initial Quality Study (IQS) – which relates to the build quality of products of various brands and also some indication of where the quality of Malaysian-made products stands in the global context – owners of non-national makes reported 136 PP100 on average, against owners of national makes reporting 282 PP100. (Note the average number of problems reported by new-vehicle owners was 259 PP100 for the industry overall). And how did Proton fare? Predictably, Proton was below average with a dismal 303 PP100 (Webpage http://www.autoworld.com.my/v2/news/nb_details.asp?keyword=&MainCat=&CarMake=&hidAction=Search&awReviewID=1479, accessed today).

In happier times, Proton used to sell six out of every 10 new cars in Malaysia, but steadily, their share of the domestic market have slid to 57% in 1993, down to 44 percent in 2004 and tumbled to just 28% in 2009.

And according to Kadir Jasin/Cheah Chor Sooi’s coffee-table book "A Saga: Proton's 25th-Year Story" (launched on Friday night), the Proton had been exported to 64 countries, cumulatively since 1986. For the financial year 2009/2010, there are 25 active markets. In any case, exports are still insignificant in terms of profit contribution.

So, okay, maybe in 2010, we shall give Proton the benefit of our doubt and let’s say Proton has improved. I am being ludicrously optimistic here! But the fact remains that Proton continue to face challenges even today! And Malaysians continue to be shortchanged!

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