Proton (automobile)

Proton Holdings Bhd
Type Public (Bursa Malaysia: PROTON)
Industry Automotive
Founded 1983
Headquarters Subang Jaya and Shah Alam, Selangor Darul Ehsan
Malaysia
Key people Syed Zainal Abidin (Managing Director)
Products Car, Automotive Parts
Revenue RM8.23 billion MYR 2009
Net income RM240 million MYR 2009
Total assets RM7.52billion MYR 2009
Employees 10,300
Subsidiaries Lotus
Website proton.com

Proton is a Malaysian automobile manufacturer headquartered in Subang Jaya and Shah Alam, Selangor, Malaysia, with a manufacturing plant in Tanjung Malim, Perak. Founded in 1983, it was Malaysia's only carmaker until the establishment of its competitor and arch-rival, Perodua, in 1993. Its name is a Malay acronym for Perusahaan Otomobil Nasional (English: National Automobile Enterprise).

It is a core member of Proton Holdings Berhad, the holding company which is listed on Bursa Malaysia. Majority of its equity is owned by a government-owned company Khazanah Nasional Berhad, making it government-linked company (GLC). For more than 2 decades since its establishment, this stake was jointly owned by Mitsubishi Motors and parent Mitsubishi Corp. which each held a 7.93% stake in Proton until they sold it in March 2004. Mitsubishi disposed its entire 15.86% stake in Proton, most of which were picked up by Khazanah Nasional, which holds 42.7% of Proton shares now. The Mitsubishi-Proton partnership was deemed a failure because of the lack of technology transfer.

Contents

History

It was established in 1983 under the direction of the former Prime Minister, Dr. Mahathir Mohamad. Since then, it was Malaysia's dominant carmaker until the establishment of Perodua in 1993. Based on technology and parts from Mitsubishi Motors, production of the first model, the Proton Saga began in September 1985 at its first manufacturing plant in Shah Alam, Selangor. Initially the components of the car were entirely manufactured by Mitsubishi but slowly local parts were being used as technologies were transferred and skills were gained. The 100,000th Proton Saga was produced in January 1989.[1]

Until the end of the 1990s, the car's logo featured the crest from Malaysia's coat of arms, featuring a crescent and a fourteen-pointed star. The new Proton logo features a stylized tiger head, as well as the change from the lowercase italic text "proton" to uppercase "PROTON". In 1993, a model called Proton Wira was introduced based on the Mitsubishi Lancer/Colt. More than 220,000 units were sold between 1996 and 1998.[2] Proton Perdana, based on the Mitsubishi Galant/Eterna, was first produced in 1995, intended for higher end market. The Proton Waja (Proton Impian in UK), which launched early 2001, is the first car model designed internally by Proton. By 2002 Proton held a market share of over 60% in Malaysia, which was reduced to barely 30% by 2005 and is expected to reduce further in 2008 when AFTA mandates reduce import tariffs to a maximum of 5%.

With the acquisition of Lotus technologies in 1996 from ACBN Holdings (a company owned by Volkswagen), Proton has gained an additional source of engineering and automotive expertise. This led to the production of Proton Gen-2 which was code name Wira Replacement Model (WRM) before the launch. The Gen-2 is the first of cars to be manufactured and assembled at the new manufacturing plant in Tanjung Malim, Perak which is part of Proton City development project. The plant was opened in 2004. On 8 June 2005 Proton introduced the second model to be manufactured in Tanjung Malim, the 1,200 cc 5-door supermini, the Proton Savvy. Both the Gen-2 and Savvy, were models that MG Rover was looking to rebadge when the British firm entered into collaboration talks with Proton. However these joint-venture talks were unsuccessful and MG Rover subsequently collapsed.

In 2007, Proton launched its new sedan as a replacement version for the Wira Sedan but with a new name, Persona, which was previously used as an export name for models outside Malaysia. The new Proton Saga replacement model (codenamed Proton BLM) was launched on 18 January 2008. The new Saga is based on the Savvy platform, but using a Campro 1.3L instead of a Renault engine. In addition, Proton has entered into talks with Mitsubishi Motors once again,[3] and talks are going positive.[4] This includes the Waja replacement based on the Mitsubishi Lancer and the rebadging of Proton Persona and Proton Exora as Mitsubishi vehicles in certain markets. As of 3 August 2008, Proton has produced 3 million cars since 1985, where the 3 millionth car is a second-generation Saga.

Proton worldwide

Proton exports cars to the United Kingdom, South Africa, and Australia and the company is aggressively marketing its cars in several other countries including the Middle East. Besides that, Proton has also been exporting a small volume of cars to Singapore, Brunei, Indonesia, Thailand, Nepal, Sri Lanka, Pakistan, Bangladesh, Taiwan, Cyprus and Mauritius. 14,706 Proton cars were exported in 2006[5] The export units jump to 21,261 in 2009 but fall to 18,769 in 2010 due to global recession. [1]

Proton began its exports from Malaysia to other right hand drive markets like New Zealand in the late 1980s, but its success was mostly limited to the United Kingdom (a market it entered along with Ireland in 1989). They advertised there with the slogan Japanese Technology, Malaysian Style. Proton cars proved popular among budget-oriented motorists, and like Japanese and South Korean models before them, led to the demise of manufacturers such as the Soviet Lada and ex-Yugoslavian (now Serbia) Zastava. By the 1990s, Proton had withdrawn from the New Zealand market after offering only the Saga four-door and Persona five-door models. The company also exited the Irish market in the early 1990s, following limited success in that country. The Persona and Natura models were sold in Chile briefly during the late nineties by a local Nissan importer, but few were sold and the venture ended after two years.

Proton enjoyed brief success as a few units of the Saga and Wira were exported to Trinidad & Tobago (Caribbean) during the late 90s where they were used mainly as rentals. Proton cars were imported into Trinidad and Tobago between 1993 and 2002. They were sold through a local dealer, H.E Robinson Ltd. Only the Saga and Wira ever reached this market with the Wira enjoying modest sales success. The bankruptcy of the dealership forced the exit of Proton from Trinidad and Tobago in 2002.

Proton also produces models in left-hand drive, for export to continental Europe. An entry into the United States market was considered by Malcolm Bricklin following Hyundai's successful launch in the mid 1980s. However, exports to the U.S. never materialized.

United Kingdom

Proton sales seem to be slowly declining in the United Kingdom with 2008 sales at 1518 (0.07% share of the market), compared to 2752 in 2002. These figures are insignificant compared to 2008 UK sales of 28,036 for South Korea's Hyundai and 29,397 for Spain's SEAT. In 2009 Proton's UK sales fell further and the marque sold only 960 cars with a reduced 0.05% market share. By 2010, only 767 cars sold in UK. [2]

In the United Kingdom, Proton cars suffer somewhat from a poor public image; they are considered poor quality products with very poor residual values compared to other cheap Pacific Rim cars from Kia, Chevrolet and Hyundai. In 1998 Proton attempted to change this by introducing the Proton Satria GTi - however, the car was somewhat out of reach to younger drivers due to high insurance premiums (the car was originally a group 16 and was reclassified in 2001 to group 14 but this still resulted in high premiums). The Satria GTi also sported a "Lotus Ride & Handling" badge which, coupled with an average security system, made it attractive to thieves. However, the vehicle was a success as far as handling was concerned which meant that, coupled with its 1.8 16-valve Double Overhead Cam Engine (which produced 133 bhp) a number were purchased by Octogon Race Circuits and used as track cars at Silverstone and Brands Hatch racing circuits. Proton’s current line-up includes the 5-door Savvy city car, the 3-door Satria Neo and new Satria Neo Sport, 5-door GEN-2 family hatchback and the 4-door GEN-2 saloon and LPG dual fuel GEN-2 ecoLogic range.

In July 2011, Proton has cause to celebrate following new research released by Direct Line Breakdown which has revealed the most reliable cars on British roads. According to the research, Proton’s range of cars has been listed as the fifth least likely to suffer mechanical breakdown, after Honda, Toyota, Mazda and Nissan.

ASEAN countries

The model that Malaysia has followed with the formation of Proton may be used as a case study for rent seeking as tariffs on imported cars rose almost immediately following the formation of Proton. Also ASEAN Free Trade Area (AFTA) agreements on relaxing entries into the ASEAN marketplace had exemptions specifically for Proton. The Malaysian government gained a three-year exemption for Proton from 2002 to 2005 where entry tariffs had to be lowered to 5%. This was replaced by other duties such as excise duty resulting in no net decrease in automotive prices for importers.

For a short time, the Proton Wira was marketed in the Philippines via LHD in 1994 with the establishment of Proton Pilipinas through the ASEAN Industrial Joint Venture (AIJV) Scheme[6][7] before they pulled out due to the 1997 Asian Financial Crisis.

In Indonesia, Proton through its subsidiary PT Proton Edar Indonesia ("PT-PEI"), the Proton Neo and Proton Waja were launched, at the 15th Indonesia International Motorshow, the biggest automotive event in the country.With these new additions, Proton now has four models in the Indonesian market. On 16 March 2007, the models Gen.2 and Savvy were to mark Proton's entry into Indonesia.

Thailand sees Proton foray during introduction of Proton’s car line-up for Thailand at the Thailand Motor Show in early December 2007. Proton entering the Thai market through authorised dealer Phranakorn Auto Sales Co Ltd, which Ltd previously held the distributorship for Daihatsu, Opel, Hyundai and Holden, and is currently distributing Honda, Isuzu and Chevrolet cars as a mega dealer.

Australia

Jumbuck, known as Proton Arena in its home country which was introduced in 2003, is the last of the Proton models on sale in Australia that still uses the old Mitsubishi technology. It has been an important model for Proton in Australia providing the market with a unique blend of passenger car-based design, half tonne capacity and low cost entry and running costs. The Jumbuck has been Proton's best seller since 2003 in Australia's ute market. The compact four cylinder Jumbuck has been designed to deliver passenger car comfort while meeting the demands of a workhorse vehicle. With good ground clearance, a roomy and very usable load area and a strong payload the Proton Jumbuck is proving ideal for a wide variety of uses from city delivery operations, to tradesman's ute, farm vehicle and even as an economical and stylish lifestyle transport for urban dwellers. Recently Proton is including a free 50cc ATV quad bike with every Jumbuck. According to Proton Cars Australia managing director John Startari the Jumbuck quad bike offer is a way of adding extra value and enhancing the attractiveness of Australia’s toughest half tonne ute. “Jumbuck has found great favour with buyers around the country thanks to its economy and reliability and this special limited offer will make it even more attractive,” Jumbuck was voted the lowest cost commercial vehicle to own and operate by NRMA Business Wise and is the perfect solution for hobby farms or as a company vehicle.

Through it fully owned subsidiary Proton Cars Australia Pty Limited, Proton's new S16 passenger car has provided a significant boost to the Malaysian car company's sales performance registering a 113.5 percent increase in sales volume for January compared with the same month in 2009. Along with a low purchase price the Proton S16 is economical to own and run sipping an average of just 6.3 litres/100 km as per ADR 81/02 while producing 82 kW at 6,000 rpm from its 1.6 litre Campro engine. Proton S16 is the only new four door sedan available in Australia for less than $16,000 and outpoints many low cost hatches and three door models by offering a 1.6 litre engine and great equipment levels.Miss Universe Australia 2009 winner Rachael Finch will be the proud face of the new Proton S16 and will be featured in TV commercials and print advertising campaigns.

The 2010-2011 NRMA vehicle running costs survey with the popular Persona taking the crown as Australia’s least expensive small car to operate. The 2010-2011 NRMA survey investigated not only the purchase price of over 1200 new cars but also fuel prices, depreciation, maintenance and insurance based on an annual distance of 15,000 kilometres travelled over a five-year period and Proton came out well on top. In the small car category Proton dominated with no less than six Proton variants in the top ten, also taking out the top 3 positions Both the Persona and Gen.2 vehicles featured in the small car category top 10.

China

Recently Proton returned to Guangdong, China, where it did business in the 2002 with Goldstar Heavy Industrial Co but withdrew after having a poor sales record. In July 2007, Proton signed an agreement with Youngman Automobile Group Ltd. Co., paving the way for the national carmaker to offer its products and services in China. Under the agreements, Youngman will import 30,000 Gen.2 CBU (completely built-up) units and resell them under its own EuropeStar brand and eventually develop a new range of Made-in-China cars with the engineering services provided through Proton's Lotus.[8] Proton is expected to ship 1500 cars a month for 20 months starting December 2007 to fulfill the order.[9]

The Europestar RCR was officially launched in China on the 9th of January 2008 in Beijing. Europestar is a brand of Youngman Automobile Sales Co. Ltd., and the Europestar RCR is basically a rebadged Proton GEN2. Youngman is confident of selling the 30,000 CBU units of Proton GEN2s within the 20 month delivery period, and has appointed 40 dealers to support the launch in terms of managing its sales, service and spare parts operations for the Europestar brand in China. CKD operations will begin soon after at Youngman’s plant in Jinan, which has an annual capacity of 300,000 units.

India

The market in India is for small cars, namely the A and B segment cars as well as MPVs. Proton Holdings Bhd intends to finalise discussions with a global original equipment manufacturer (OEM) within this quarter to set up contract assembly manufacturing operations in India. Proton was hoping to engage in contract assembly manufacturing via a joint venture effort with the OEM. They like to incorporate their own subsidiary that would work with a local partner to distribute cars in India. The local partner in India “already had a plant and assembling its own cars.” Proton was looking at offering the Saga, Persona, Exora multipurpose vehicle (MPV) and Emas hybrid in India.

Russia

Proton Holdings Bhd's entry into Formula One (F1) racing is more than just about turning around wholly owned Group Lotus plc, as it may also open doors for it to do business in Russia. Genii Capital, the investment company that owns Lotus Renault GP team, the team Group Lotus will partner in FI, thinks it could help Proton enter the emerging market of more than 160 million people.

Genii is owned by Gerard Lopez and Eric Lux, who also run venture capital group Mangrove Capital Partners. Mangrove is famous for its hugely successful bet on Skype, which lets people make free phone calls over the Internet. As for Genii, now the 100 per cent owner of Lotus Renault, it has signed a deal that gives Group Lotus a two-year option to buy half of the racing team. Genii would be able to help Proton with its business relationships in Russia as well as to access advanced automotive technologies under its companies.

Middle East

In Iran, Proton will be supplying 5,000 units of the Proton Waja to be used as taxis in Iran through Iran’s Zagross Khodro group. It is marketed as the Proton Impian there, the same name used in other export markets such as the UK market. Iranian President Mahmoud Ahmadinejad and Malaysian Prime Minister Abdullah Ahmad Badawi signed a Memorandum of Understanding (MoU) in Tehran in the same regard. Director Generals of Iranian Zagros Khodro and Malaysian Proton car manufacturing companies have inked mass production agreement. Proton and Zagros Khodro companies have been commercial partners for over seven years and the new agreement for Gen-2 production in Iran is concluded for a new level of cooperation.

In 2009, a group of Iranian and Malaysian engineers and experts are working in Iran's Boroujerd Company to run Gen-2 assembly line, to assemble CKD kits of the Proton GEN2 at Zagross Khodro’s plant in Borujerd. The same plant also assembles Proton Wiras. There are currently 9,634 Protons on the roads in Iran today, after Proton’s entry into the Iran market in 2002. 50,000 units Gen-2 cars will be produced yearly within the next five years with Proton supports production and supply car parts. Plan in the pipeline including assembly line of Malaysian Proton Saga (New Saga) running in Iran in the year 2010.

Proton first entered the Syrian market via a sole distributorship agreement with a Syrian company, Modern Technology Trading Company, a subsidiary of Habbal Group of Syria. The company, headed by Habbal Group chairman and chief executive officer Ghyath Al Habbal, holds distributorship rights for Proton cars in Syria, Iraq and Lebanon. Proton Holdings Bhd is strengthening its presence in the Middle East market, with the launch of the Persona model, is expected to boost the national car maker’s overall sales in Syria to over 5,000 units in the next three to five years. Proton have been selling cars in Syria since 2001 and after Gen-2, they are optimistic on how the Syrian market will accept the Persona, which has won many customers for being cost-effective with better fuel economy.

The Persona was launched by PROTON Holdings Berhad Managing Director Dato’ Haji Syed Zainal Abidin Syed Mohamed Tahir in Kingdom of Saudi Arabia on 22 November and in Egypt on 24 November. The Gen2 model was also jointly launched in Egypt.PROTON had entered the Saudi market in 2006 when it introduced the Waja model via a smart partnership collaboration with local outfit Al Rashed Al Thunayan Auto Co.In Egypt, PROTON first launched Waja and Wira models in 2001 and in 2006 brought in the Gen.2 hatchback. Similarly, PROTON had also established a smart partnership with an Egyptian company Alpha Ezz Elarab Co. as its distributor in the country. Both Al Rashed Al Thunayan Auto Co. and Alpha Ezz Elarab Co. have been instrumental in the development of PROTON sales in Saudi and Egypt respectively.

Japan

The 2011 Proton Satria Neo CPS R3 was debuted during the Tokyo Auto Salon 2011. Japanese auto part company Carrosser Co., Ltd. (CUSCO) imports the 2011 Satria Neo CPS R3 and equips the Satria Neos with CUSCO performance parts before being resold to rally teams in Japan and Asia Pacific. As the importer and distributor of the PROTON Satria Neo from Malaysia to Japan, Carrosser had taken on a project to build a Group N machine for the CUSCO Junior Rally Team with this chassis. In addition, CUSCO also forms their own team running on the Satria Neos to compete in the 2011 Asia-Pacific Rally Championship, making the team as the second team to use the Proton Satria Neo for the championship.

Joint ventures and partnerships

Abortive strategic partnership with Volkswagen AG

In October 2004, Proton announced that an understanding had been reached with Volkswagen AG of Germany to establish a strategic partnership. Under the tie-up, the two carmakers were expected to exploit each other's strengths. Proton would gain access to Volkswagen Group's superior technical capabilities and technology. In return, Volkswagen Group would utilise Proton's spare capacity at the latter's Tanjung Malim plant to assemble cars for export to the South-East Asian market, where the German auto giant had a weak presence.

On 13 January 2006, Volkswagen Group finally announced that negotiations about the partnership had failed because its desires clashed with the terms and conditions offered by Proton; their interest was more in eventually controlling Proton Holdings, rather than just being a strategic partner.[10] Despite this, Malaysian news announced that Volkswagen AG had signed an agreement to buy a 51% share in Proton on 26 January 2007, which turned out to be unfounded. Throughout most of 2007, rumours about continuing merger talks with Volkswagen Group, and occasionally General Motors surfaced in the local press and at briefings given by top government officials.

Finally however, on 20 November 2007, Proton announced that talks regarding any partnership with Volkswagen Group had ended with immediate effect, citing improving sales over the year, a favorable export outlook, and confidence in management turning around the company without external collaboration. This unexpected announcement resulted in a 19% overnight drop in Proton's share price to their lowest value in seven years, due to the market's perceived uncertainty about the future financial viability of the company in an increasingly competitive local and world market. Proton did however state that they may resume talks about collaborating with other manufacturers at later unspecified dates.

Detroit Electric

On 2 September 2008 Detroit Electric announced plans to progressively roll out affordable electric vehicles worldwide by the end of 2009. Proton cars are to be used and tested in order to validate Detroit Electric's technology and explore the potential to collaborate to create a range of pure electric cars. Detroit Electric has to date integrated its electric drive systems into Proton's Lotus Elise and two Proton passenger cars. Detroit Electric hoped to collaborate with Proton to sell electric cars for the Southeast Asian market or to use Proton's existing manufacturing platform to produce electric cars under the Detroit Electric brand. The company planned to roll out 30,000 electric cars by 2010, as he demonstrated their performance at a Proton test circuit in Shah Alam, west of the capital Kuala Lumpur.

Jianhua Youngman Automobile Manufacturing

Proton MD Syed Zainal says these are landmark win-win agreements as it would enable Proton to sell its products and commercialise its technologies in China through Youngman for their brand of passenger cars in a huge market with promise of exponential growth. Proton's relationship with Chinese maker Jianhua Youngman Automobile Manufacturing - which includes the supply of Proton vehicles for rebadging and sale in China - is on track, according to reports starting early 2009. Malaysia's Edge newspaper said that Proton is estimated to have supplied at least 13,000 units of its GEN 2 cars to China's Jianhua Youngman Automobile Manufacturing Co Ltd since the end of 2007. The cars are rebadged and sold under the Europestar brand in the country.

OSK Research Sdn Bhd's analyst Ahmad Maghfur Usman said this was based on the information given by the national carmaker, adding that on the higher end of the scale it could have supplied up to 17,000 cars. "Based on the agreement between the two that a minimum 30,000 cars will be supplied over two years, Proton appears to be on track." he told the newspaper.[11]

Youngman is assembling Lotus and Europestar branded cars in Guangdong for the Domestic Chinese and export market. The units receive a Chinese independent brand to differentiate itself from the English sports car models. The Chinese part of the Lotus Cars is better known under the name Youngman Lotus. Youngman Europestar launched a new car at Auto China 2010, engineered by Lotus for the Chinese company. The previously launched RCR (GEN2) and Jingyue (Persona) have been renamed the Lotus L3 5-door and 4-door respectively, while this new model has been christened the “Europestar Lotus L5″. The Youngman L5 is based on a Proton GEN2 platform with a lengthened wheelbase of 2,670mm which is 70mm longer than the original GEN2 wheelbase.

In Proton’s announcement in Bursa Malaysia, it stated that the relationship of Proton and Youngman is one of independent contracting parties and shall not be construed as creating an agency or partnership between the parties.

Nissan Motor Co. Ltd.

The Board of Directors of PROTON Holdings Berhad wishes to announce that the Company has on 1 March 2011 signed a MOU with Nissan Motor Co. Ltd. The MOU will pave the way for feasibility studies to be conducted on specific areas of cooperation between the Parties including the potential use of Nissan's platform and powertrain. The duration of the feasibility studies will commence from the date of the signing of the MOU and end on 30 April 2011.[11]

Acquisitions

Lotus

In 1996, Proton acquired a 63.75% share in Lotus Group International Limited for £40,640,000.This was later increased to 100% in 2003. A later PriceWaterhouse Coopers audit would find that the CEO, Yahaya Ahmad, had inked the agreement on 16 October 1996. The agreement was presented to the board for approval on 27 November 1996. As part of the purchase agreement (signed prior to board agreement), there were restrictions placed on Proton's ownership of Lotus. One of the restrictions was a prohibition on diluting ACBN's remaining shareholding for a period of five years. This restricted Proton in its operation of the Lotus business and required Proton to guarantee a £40 million loan in 2000.

MV Agusta

In December 2005, Proton purchased a majority share in MV Agusta of Italy at €70 million. MV Agusta was the manufacturer of MV Agusta, Husqvarna, and Cagiva motorcycles. A year later, Proton sold off its 57.7% share in MV Agusta to Italy's GEVI Spa for a token of €1. Due to heavy debt by MV Agusta, the selling enabled Proton to write off the losses off its book, but the buyer would assume the €107 million ($174 million) debt. In August 2007, GEVI SpA, which bought MV Agusta for €1, sold the brand Husqvarna and its factory to BMW for a reported €93 million leading to speculations by the Malaysian public of bad management of the company's board of directors resulting in further loss of reputation for the company.

Motorsport

Formula One

Before 2010, Team Lotus had last competed in Formula One in 1994 when the team went into administration. The team assets (including the "Team Lotus" name) were sold to David Hunt and Team Lotus Ventures Ltd.

In 2010, Lotus returned to Formula One in the form of Lotus Racing. The use of the Lotus name was licensed from Group Lotus, otherwise the team was not associated with Proton or Group Lotus. Before the end of the season, the relationship between Lotus Racing and Group Lotus had come apart and team principal Tony Fernandes acquired the rights to the "Team Lotus" name by agreeing to purchase Team Lotus Ventures. For 2011, Lotus Racing announced that they would be competing in Formula One as "Team Lotus".

Meanwhile, Genii Capital, owner of the Renault F1 Team, and Group Lotus entered an agreement where the team would be renamed "Lotus Renault GP" [12]. Thus, in 2011, there were two Lotus Formula One teams.

Lotus Racing and Group Lotus sued and countersued each other over a variety of claims. On 27 May 2011, the UK High Court ruled that Lotus Racing had violated the terms of its license agreement with Group Lotus but Lotus Racing was owner of the "Team Lotus" name and roundel (the nose badge symbol) [13]. However, by the time that the ruling was issued, Lotus Racing (then operating as "Team Lotus Enterprises") had purchased Caterham Cars. Before the end of the 2011 Formula One season, Fernandes and Group Lotus came to an agreement that, for 2012, Fernandes' team would be called "Caterham F1" and the Group Lotus-backed team would be called "Lotus F1" [14].

GP3, GP2 and Indycar

Participating in the GP3 Series, Lotus-Art showcases the competencies of young driving talent. The series is designed to harness young driver’s raw competencies and offer a proving ground in which drivers can grow their craftsmanship. Lotus & ART have joined forces in 2011 to compete in the FIA GP2 Championship, widely regarded as the principal proving ground for future F1 Drivers. KV - Racing Technology Lotus enters its 2nd season as partners and will contest this years Championship with 3 cars, driven by multi-race winner Tony Kanaan, ex-F1 Driver Takuma Sato and EJ Viso. The 2011 Indycar series is the 100th season of America's premier category of Open Wheel Racing. The series blue ribbon event was the 95th running of the Indianapolis 500 in May, the single largest sporting event in the World.

Intercontinental Rally Challenge

Proton entered to Intercontinental Rally Challenge 2009 with Proton Satria Neo Super 2000. Their best result in IRC is Alister McRae finish 2nd place at 2009 Rally Scotland. Drivers in 2009 were Karamjit Singh, Guy Wilks, Bryan Bouffier and Alister McRae scoring 13 points. In 2010 Proton team had many retirements and did not score a single point. Drivers for 2010 were Alister McRae, Chris Atkinson, Niall McShea, Keith Cronin, Gilles Panizzi and privateer with factory support, Tom Cave. Best result of 2010 season was 22nd place of Gilles Panizzi at 2010 Rallye Sanremo, although it was the only finish of Proton Satria Neo S2000 in this season. Two of the cars were also used in a rally challenge between the hosts of Top Gear UK (Series 16, Episode 03) and Top Gear Australia (The Ashes Special). The Stig (UK) and Steve Pizzati (Australia) drove the two cars while Richard Hammond (UK) and Ewen Page (Australia) guided the respective drivers across a rally track.

Charges of protectionism

When the first Proton appeared on Malaysian roads in 1985, local wits promptly dubbed the Proton Saga as the 'Potong Harga', meaning the 'cut-price'. And for good reason as the Proton was at least 20% cheaper than non-national makes in the same 1.3 to 1.5 litre class. With both the low price and a dash of national pride working for it, the Proton got a rapid hold on the market. By 1988 the Proton, with a model lineup of one, had overtaken all other makes and models and grabbed 73% of the Malaysian passenger car market.

In 1983, when the 'national car' was planned, Malaysia had an annual new car market of about 90,000 units, and the market was growing annually by 20%. The Proton plant was designed to produce 80,000 units a year and could be geared up to 120,000 units. But in Proton's first full year of production (1986), total car sales took a severe dip to 47,000 and next year, due to a worsening economic situation, just 35,000. Only in 1988 did the market begin a recovery to 54,000 units, by now most of them Protons. Since then, the market has grown steadily to a 2005 peak of 417,000 cars[15]

Government policy has kept the Proton cheaper than other makes by the simple strategy of taxing the competition, while giving Proton exemptions or rebates from these same taxes. Duties on packages of parts for assembly into complete cars in Malaysia is said to average about 30%. Proton is exempted from most of these[16]

On 1 January 2008, the postponed-several-times full implementation of an ASEAN Free Trade Agreement [17] which Malaysia originally signed on to in January 1992, was to finally have come into effect. The agreement would effectively bar practices that discriminate against goods (including vehicles) that are considered “Made in ASEAN” by the use of Tariff and/or Non-Tariff Barriers. This would practically eliminate most of the price advantage, achieved by way of the 50% rebate Proton (and other “Malaysian-made” cars) enjoy on a hefty (75 to 105%) engine-capacity-related Excise Duty applied to new cars sold in Malaysia.

This rebate is largely responsible for non-Malaysia ASEAN-made cars costing between 30 and 60 % more than an equivalent Malaysian-made vehicle. With a “level playing field”, within the confines of CEPT[17] (which till end 2009 allows a maximum 5% import duty, reducing to zero in 2010) using existing FOB prices, an ASEAN (Thai-made) Honda or Toyota would sell for within 10% of a comparable Proton, and would probably result in the devastation of Proton's market share and the company. As it appears that this would be an unacceptable consequence to the Malaysian government, for the time being, local car manufacturers will be allowed to continue receiving the excise duty rebate, with the Malaysian Government picking up the tab for probable penalties it will have to pay to ASEAN members for violating established free-trade regulations.

As 2008 progressed, it became apparent that more and more global manufacturers reasoned that the level playing field stipulated by CEPT will continue to be ignored by the Malaysian government for as long as possible. This temporarily derailed these manufacturers' previous plans to use Thailand (principally) as their ASEAN manufacturing hub, and forced them to reintroduce Malaysian-assembly of some models from CKD. This move allowed these foreign marques to benefit from better tariff structures applied to such vehicles, in an effort to remain competitive (in the non-National car segment), and to narrow the price difference between their models and equivalent (Excise Duty rebated) Malaysian-made cars.

The very latest update to the Malaysian Automotive Policy framework (October 2009) fails to mention any change in this discriminatory rebate policy, thereby reinforcing the suspicion that the Government will not abide by stipulated "level playing field" requirements for the foreseeable future. It should be noted that the main “solution” being pushed by the Malaysian Government to maintain the pricing advantage of locally made cars, by providing grants and subsidies (to counteract any potential removal of the excise Duty rebate) would also be deemed to be non-compliant with the Trade Agreement, contravening Non-tariff barriers to trade requirements.

The lack of direct competition at Proton models' price points (in Malaysia) has also allowed Proton, for many years, to continue selling very outdated designs, generally with scant regards to providing basic safety equipment such as airbags and anti-lock braking in domestic models. Additionally, J.D. Power survey results have consistently shown that Protons have poorer rankings in initial quality than the available competition[18]

Improvement in sales

In 2006, Proton's sales dropped 30.4% from 166,118 in 2005 to 115,538 for the Malaysian market,[19][20] with a later report indicating a 55% fall of sales to 962.3 million ringgit, its lowest in at least seven years.[21] This allowed Perodua to overtake Proton as the country's largest passenger carmaker for the first time, with a 41.6% market share, while Proton's market share fell from 40% in 2005 to 32% in 2006. In the period ending December 31, 2006, Proton has also suffered three consecutive quarterly losses. Compared to a profit of 86.5 million ringgit in 2005, the car company lost 281.5 million ringgit in 2006. Proton blamed discounts from rivals. Total losses in 2007s financial year climbed to $169 million.[21]

The Employees Provident Fund (EPF) acquired an additional 830,000 shares in a transaction that spanned between January 5 and January 12, 2007.[22] This mean all Malaysian are shareholder of the national car maker.

As compared to Proton, Perodua has been quite successful in its business ventures. Its cars are very popular among Malaysians, such as the Perodua Myvi, which sold 80,327 units in 2006, outselling its rivals best selling car, the Proton Wira then, which only sold 28,886 units in Malaysia. In 2006-2010, Perodua became the best selling car company in Malaysia. In the first half 2011, the table has turn upside down where a highlight of the figures was that Proton had overtaken Perodua to be the best-selling brand this year. It’s been many years since the first national carmaker has been No.1 and though part of the reason was that Perodua’s supply in the second quarter was limited (due to phasing-out of the old Myvi) and also the problems caused by the amendments to the H-P Act, it has also to be said that Proton’s current line-up is its strongest ever and has drawn many customers, noted the core models Proton Saga and Proton Persona. Proton delivered 85,223 units to take a 28.7% share of the TIV while Perodua delivered 79,467 units, a difference of 5,756 units.[23]

PROTON Holdings Berhad registered a profit before tax of RM186 million in the first half of its 2010/11 financial year benefitting from the improved market sentiments and conditions which had accounted for a 13% increase in its vehicle sales. The growing demand for Proton vehicles were significantly contributed by three core models; the Saga, Persona and Exora.

Sponsorship

From 2003 to 2006, Proton were the main sponsors of Norwich City F.C., the English football club. The Lotus brand was advertised on the club's away shirts. From 1999 to 2000 Proton 5x5 was Fenerbahçe's sponsor. Proton Cars Australia already sponsored a rugby team from Australia which is Wests Tigers.

Proton name is also synonymous with Le Tour de Langkawi Cycling Tour since its inception in providing crew fleet of cars. It is the Official Car Provider for Le Tour de Langkawi 2011 which in turn sponsoring a total of 150 unit of cars of various Proton models plus other merchandises to an estimated total value RM600,000. As part of the sponsorship, Proton also providing technical assistance for the maintenance of the sponsored cars and also in the case of breakdowns. For this purpose, Proton dispatching approximately 50 personnels comprising technical experts, drivers for the Cavalcade Convoy and other representatives of Proton who be on stand-by to provide assistance throughout the event.

See also

References


  1. ^ Todd, Halinah (May 1989). "The Proton Saga saga". New Internationalist. http://www.newint.org/issue195/proton.htm. Retrieved 2007-02-28. 
  2. ^ Sorabjee Hormazd, Paul Fisher & Chips Yap (23-30/08/1999). "Asia's Century on Wheels". Time Asia. http://www.newint.org/issue195/proton.htm. Retrieved 2007-02-28. 
  3. ^ http://announcements.bursamalaysia.com/EDMS%5Cannweb.nsf/LsvAllByID/482568AD00295D074825750E0005C2E7?OpenDocument
  4. ^ "Proton in product collaboration with Mitsubishi". Biz.thestar.com.my. 2008-12-05. http://biz.thestar.com.my/news/story.asp?file=/2008/12/5/business/2727852&sec=business. Retrieved 2010-02-12. 
  5. ^ "RTM article". http://besonline.rtm.net.my/modules.php?op=modload&name=News&file=article&sid=67995&mode=thread&order=0&thold=0. 
  6. ^ Rafaelita A.M. Aldaba. "Increasing Globalization and AFTA in 2003: What are the Prospects for the Philippine Automotive Industry?" (PDF). p. 17. http://www3.pids.gov.ph/ris/dps/pidsdps0042.pdf. Retrieved 2009-05-10. 
  7. ^ Rafaelita A.M. Aldaba. "Increasing Globalization and AFTA in 2003: What are the Prospects for the Philippine Automotive Industry?" (PDF). p. 15. http://www3.pids.gov.ph/ris/dps/pidsdps0042.pdf. Retrieved 2009-05-10. 
  8. ^ "Proton Secures Deal With China's Automaker". http://www.bernama.com/bernama/v3/news_lite.php?id=273089. 
  9. ^ Leong Hung Yee (2007-12-29). "More Proton models for China". Biz.thestar.com.my. http://biz.thestar.com.my/news/story.asp?file=/2007/12/29/business/19878639&sec=business. Retrieved 2010-09-30. 
  10. ^ Yong Soo Heong (2006-01-13). "VW's demands wreck deal with Proton". Malaysia Today. Archived from the original on 2007-01-03. http://web.archive.org/web/20070103024747/http://www.malaysia-today.net/Blog-e/2006/01/vws-demands-wreck-deal-with-proton.htm. Retrieved 2007-02-28. 
  11. ^ a b Holding, Proton. "Proton-Youngman". Proton holdings. http://www.just-auto.com/news/proton-and-youngman-relationship-on-track_id97772.aspx/. 
  12. ^ "Renault F1 team to be renamed Lotus Renault GP in 2011". 8 December 2010. http://news.bbc.co.uk/sport2/hi/motorsport/formula_one/9267715.stm. Retrieved 29 December 2011. 
  13. ^ "High Court rules Team Lotus can keep its name". 27 May 2011. http://news.bbc.co.uk/sport2/hi/formula_one/13572332.stm. Retrieved 29 December 2011. 
  14. ^ Benson, Andrew (9 November 2011). "Team Lotus brand to disappear from Formula 1 next season". http://news.bbc.co.uk/sport2/hi/formula_one/15661185.stm. Retrieved 29 December 2011. 
  15. ^ "Malaysia Automotive Association Summary of Sales & Production Data". http://www.maa.org.my/info_summary.htm. 
  16. ^ "The Proton Saga saga". http://www.newint.org/issue195/proton.htm. 
  17. ^ a b "Agreement On The Common Effective Preferential Tariff (CEPT) Scheme For The ASEAN Free Trade Area". http://www.asean.org/1164.htm. 
  18. ^ "Initial Vehicle Quality Improves for a Third Consecutive Year in Malaysia" (PDF). http://www.jdpower.co.jp/press/pdf2006/2006MalaysiaIQS_E.pdf. 
  19. ^ "Malaysian auto sales down 11% in 2006". http://biz.thestar.com.my/news/story.asp?file=/2007/1/25/business/20070125134350&sec=business. 
  20. ^ Whitley, Angus (2007-01-25). "25/01: Malaysia's Proton loses top-selling spot for the first time". Bloomberg.com. Archived from the original on 2007-10-10. http://web.archive.org/web/20071010051848/http://malaysia-today.net/blog2006/newsncom.php?itemid=2090. Retrieved 2007-02-28. 
  21. ^ a b Whitley, Angus (2007-02-27). "Proton Posts Loss as Sales Slump to Lowest in 7 Years (Update2)". Bloomberg.com. http://www.bloomberg.com/apps/news?pid=20601080&sid=axpaLGflllBA&refer=asia. Retrieved 2007-02-28. 
  22. ^ AFX-Asia (2007-01-24). "EPF buys more shares in Proton". The Star Online. http://biz.thestar.com.my/news/story.asp?file=/2007/1/24/business/16658109&sec=business. Retrieved 2007-02-28. 
  23. ^ "The car market after 6 months". http://motortrader.com.my. http://motortrader.com.my/Cars/NewsHeader/Highlights/The-car-market-after-6-months.aspx. 

External links