Proton: Where to now?

Proton saga continues
What's the deal with Proton?

Proton: our national car company. Once pride of the nation, now the sick man of the nation. How did you go from such lofty heights to murky lows? Where is your long-awaited saviour? Or will there be a saviour? Or will Proton fall victim to the backroom dramas of the political tussle that is now Mahathir vs. Badawi?

To recap: Proton was the brainchild of our then Prime Minister Tun Mahathir Mohammad in 1985, who was to transform Malaysia from an natural resource-based industry into one based on manufacturing. Indeed it was a far-sighted plan as at the time, most of the region still imports cars from established countries like Japan, Korea and the United States as they are without a national-car company of their own. And with Proton's success it would spur a whole new growth of industries that would eventually ebb and flow along with Proton. Initially Proton was a success, propelled by a combination of national pride and heavy import taxes that made foreign vehicles out of reach for most Malaysians. Proton even exported its Iswara models to various countries (you can see one in an episode of Mr. Bean comedy series!) But somehow Proton lost its direction along the way. Now it is in dire-straits, faced with falling market share, lack of new models and the looming liberalisation of motor-vehicle imports, one wonders what the Government plans to do with Proton...or will the government do anything for Proton? A whole industry on its last legs...not a pretty sight to see.

Where did the rot first start? It probably would be not difficult to pinpoint: in protecting Proton our leaders robbed the company from competitiveness that would have provided the impetus to move forward. Instead it languished behind as the other car makers moved forward while we made copycats of older foreign models. Slow and unable to respond (due to inertia of the government and company management) it relied to heavily on high import taxes on foreign cars to maintain sales. The purchases of Lotus and MV Augusta which was to help transfer technology and improve on branding failed miserably. It also had to support the various industries it spawned with it's creation: the various spare-parts suppliers and car dealers; too dependent on Proton, it's staring at oblivion in the face.

The birth a second national car, Perodua didn't help matters. Initially unspectacular, it gradually caught on with Malaysian car-buyers, especially after the 1998 Asian financial crisis, for its affordability and better quality. (Better quality is still relative; foreign cars are still better) It's Kancil and Kelisa models were very popular; now with it's Myvi models selling like hot cakes, it has overtaken Proton in sales.

No decision on Proton partner
VW chief yet to turn up for Proton partnership talks

Two years ago, there was a ray of light: possibility of a tie-up with a foreign marquee - Volkswagen AG of Germany. However, with national pride overriding business concerns, talks stalled and failed. In the meantime, Proton continued it's spiral downwards. Early this year, hopes were revived again - apparently with all parties involved bending over backwards to make the tie-up a success. The March 31st dateline came and went without even a whimper; now we wonder whether the powers-that-be have decided to let Proton die a painful death. Or would the government continue the bailout the likes of Bank Bumiputra, Renong and Malaysian Airlines of the past?

Things going from bad to worse for Proton dealers

The quality of Proton cars rolling off the assembly line leave much to be desired. Admittedly this slow degradation occurred over a long period of time: the initial models of Proton Saga and Proton Iswara were well-built, but with many various industries to support, quality issues took a back seat to quantity. It was apparent that Proton was churning out more cars than it could sell; upstream providers needed the business. But those unfortunate enough to be downstream: the car dealers, suffered. As the country progressed and people got richer, more were turning away to foreign models. Now, not even RM 28,000 price tag could sell enough cars to make a difference.

I wonder whether there is actually a concerted effort to save Proton. It is after all a 'Mahathir' project, and with the new Prime Minister stamping his mark, little attention would be given to Proton (just look at the Multimedia Super Corridor). And of course those depending on Proton for survival, would have to be compensated, as well as relocated to other in-vogue industries. Proton, unfortunately has become a political pawn which will eventually have to be sacrificed to advance the agenda of others. Let's hope that this does not come true.