Wednesday, June 15, 2016

Why Proton Probably Cannot Compete

If one were to ask why Proton should no longer exists ... or why Proton is finding it so hard to make money after such a long time ...: Most will cite the fact that we were uncompetitive (design, research, economies of scale, talent, domestic market). If thats not enough to convince you, well, look at the GLOBAL CAR INDUSTRY, and then see what you can CONCLUDE FROM THE PICTURE:






















































Conclusion: Look at 99% of the auto makers, they are under ONE BIG UNIT. How in HELL or HEAVEN can Proton compete with these units. They will be able to share research costs, design costs, management processes, share backoffice expenses, sourcing economies of scale, buying power over suppliers and even distributors ... with the array of products, they can even "negotiate with leverage with governments and unions" to get tax breaks, incentives and cheap land for assembly and manufacturing. Naturally the bigger the grouping, the better the ability to attract and reward genuine talent.

Even when you try to protect Proton by imposing high tariffs/taxes on imports ... our domestic market is just not big enough - almost all profits recorded by Proton came from the pockets of Malaysians who have no choice but to pay for an over priced Proton cause other imported cars have been pushed even higher artificially. Where are we we in terms of earnings per capita, we do not make even the top 30 0r 40 countries. But where are we in terms of car prices globally??? We are in the top 3. Thats a huge chunk from our free cash flow. Enough la, citizens subsidised, then government also gives out loan again and again. I am all for patriotism but sometimes it no longer makes sense. At least we gave a try, lets move on.

Each and every factor I have mentioned, you can pinpoint where Proton will be in terms of competing with them. So, please seriously consider shutting it down, or selling to somebody cause we have no economies of scale, cost advantages, design superiority, ... to speak of. We will just continue to ask MOF for funds every 3-5 years.



10 comments:

Andrew said...

Although PROTON mentioned that this is the ONLY and FINAL bailout they need from the Government, I highly doubt it. (Almost fell off my chair! LOL)

PROTON is not competitive not only because of the other major auto manufacturers but because it, in itself is super inefficient. Just like MAS. Too many employees doing the same crap. They are not streamlined. They do not have the proper work ethics and drove.

One thing I do know that PROTON was so good at was making the majority of the auto owners miserable because of the super high taxes imposed on autos.

Siew's site said...

Should Malaysia maintain a "car industry" instead? It is easy to say "shut down Proton", but there are mouths to feed...

Gerald Morten said...

Proton is never about making cars....it is about income distribution...it is about gravy train.....making cars is just an excuse..and so it shall continue...

Salvador Dali said...

Siew,

That is a stupid reason to keep Proton running. Mouths to feed, jobs lost ... if all think like that the gov just continue to run all loss making biz lor. Jobs are capital and resources ... instead of dumping money to a silly unprofitable biz, why not try to create jobs in a profitable entity ... then no need to keep plugging holes and in fact can bring forth profits.

James Fernandez said...

Let us not forget the direction of the car industry in the coming 10 years, which is Hybrid and Electricity, not to mention auto-driving.

Proton cannot even make a proper engine, and their Petronas engine is so outdated that it is not fuel efficient.

If Proton is not dead after 30 years, we will probably be one of the few countries that still uses fuel with auto-driving and many more.

Proton is too small... too tiny. Just like our 'Toy' Monorail and many more. The problem with Dr.M is he thinks to be a first world we need hardware, but he forgot software. First world is about mentality, not having the tallest building, longest roti canai, tourist in space and etc.

Proton... just do us Malaysian a favor, sell to Tesla.

Siew said...

I didn't mean to suggest that Proton be kept alive simply to maintain employment.

I was asking whether Malaysia should even have a car industry in the long run. If not, then how is this country going to generate the wealth to feed its citizens. We have don't the know-hows at the high ends, and we don't have cheap labours.

ROSLI JAAFAR said...

Siew, " Mouths to feed ".....no company can GURANTEE TO a job. Company dont make manoe...CLOSE SHOP.

bruno said...

The GOP's convention is still one month away.But,the presumptive nominee "Bigot Donald Trump's" goose is already cooked.Go figure.

cs said...

Ford is a strategic partner of Mazda. Subaru is part of the Toyota group. Tesla will soon be part of the Big three as Elon is definitely looking to sell it of.

klsekaki said...

Proton and its business chain has 12,000-20,000 employees and their salary is subsidized by taxpayers.

Malaysia has 30 million population and more than 10 millions car users and have been paying extra on average RM 600 PER MONTH or RM 7,200 PER YEAR- RM for additional tax.

The government has been giving out AP for cars for politician and cronies and losing RM 3-5 billions of income PER YEAR.

The government is collecting RM20 - RM50 billions from car industry.

Rakyat is the only who suffering!!!!!!!!!!