GM could buy into Malaysia's Proton car

General Motors, the world's largest car maker, could buy a stake in Proton, the predominantly Malaysian state-owned car company that's seeking a partner to stem losses, a government official said.

GM had "shown interest" in Proton, Malaysian Second Finance Minister Nor Mohamed Yakcop said yesterday. Separate talks with Volkswagen and Peugeot Citroen were continuing, he said.

Proton ended a 21-year alliance with Japan's Mitsubishi Motors in March 2004 and is seeking a new partner to revive sales, which fell to the lowest in at least seven years in the September quarter.

GM is expanding in China, India and other Asian emerging markets as sales slump at home.

"GM can use Malaysia as an Asian platform and that's very positive for Proton," said Nik Azhar Abdullah, a manager at Avenue Asset Management. "If you have three big names who want to get involved with Proton, it's very good."

Proton shares jumped 10 per cent to 7.05 ringgit, giving the company a market value of R3.73 billion ($1.35 billion).

GM may offer as much as 10 ringgit a share, the New Straits Times reported on January 13. Malaysia's state investment arm Khazanah Nasional owns 43 per cent of Proton.

"The best partner is not necessarily the one that offers the highest price," said Sharifah Farah, an analyst at CIMB Securities Sdn. "Proton needs a partner that it can work with to achieve its objectives over the next 10 years."

Rob Leggat, a Shanghai-based spokesman for General Motors, said by phone that the company had held talks with Proton. He declined to say what was discussed and called the New Straits Times report "very speculative".

General Motors said in November 2000 it was in talks with Proton about forming an alliance in Malaysia, South-East Asia's biggest passenger car market. The discussions did not produce a partnership.

Proton is worth pursuing because of its share of the local market, said Graeme Maxton, managing director for Asia at Autopolis, an adviser to the Malaysian Government. Proton had 24 per cent of Malaysia's car market as of September 30, according to the Malaysian Automotive Association.

Proton said in November its loss grew to R250.3 million in the September quarter, from R154.3 million a year earlier.

Malaysia's Proton struggles on

KUALA LUMPUR - Malaysia's national car, the Proton, owes its very existence to Mahathir Mohamad, the country's septuagenarian prime minister. In the early 1980s, when Mahathir first dreamed of putting the Islamic star and crescent badge on the front of what was even then an aging Mitsubishi Lancer and called it the Proton Saga, nobody, inside Malaysia or out, thought he could do it or would. They were wrong. In 1986, the Proton Saga hit the road.

Today, driving on the highways that Mahathir begat to handle them, it is hard not to notice how dominant the national car has become. Protons make up about two-thirds of all of the cars traveling Malaysia's roads.

In a rational world it would be questionable how long the car would survive Mahathir's 22-year reign, which ends in October when he retires. Proton, or Perusahaan Otomobil Nasional, as the government company is called that builds the cars, violates all of the rules of economics and carmaking. Because Malaysia's market is small, it would be difficult if not impossible to sell the half-million or so that are required for economies of scale to make manufacturing efficient.

The car, however, has a complicated hold on Malaysia's national psyche. To a great extent, it encapsulates the combative prime minister's vision for Malaysia. When he came into office, Malaysia was primarily an agricultural country whose income was founded on the triumvirate of rubber, oil palm and tin. Oil platforms in the South China Sea added to the mix.

But Mahathir was obsessed with industrializing what had been a somnolent tropical backwater. The country initiated disastrous experiments in steelmaking, cement production and other white elephants whose costs still have not been tabulated and won't be under what amounts for all practical purposes to a one-party political system. Proton's balance sheet debt is RM700 million (US$184.2 million) and falling, but that is because the capital construction costs for the car's two plants, estimated by analysts at as much as US$2 billion or more, don't appear on Proton's balance sheet. The costs were borne by the taxpayers.

Proton became the number-one car only because government intervention imposed a warped import tax regime that tacked tariffs ranging from 140 to 300 percent on to foreign cars and priced them well out of the reach of ordinary Malaysians. Thus opportunity costs - the money foregone by consumers who either have to pay the tariff on other brands they would prefer to drive or buy Proton - are estimated by analysts to be even higher. Proton has averaged sales of about 105,000 cars per year through the 1990s, analysts say, surviving on the high tariff rates. Consumers on average overpay by at least RM15,000 per Proton car, partly because of royalties paid to Mitsubishi (RM16 billion over the decade) and about RM20,000 per non-Proton car (RM17 billion over the decade), the analysts say.

Other industrialization projects were similarly costly and inefficient. But going to Malaysia today is very much entering a developed nation. Its roads are good, its cities are squeaky clean, its telephones work, its cargo-handling facilities are starting to rival Singapore's, its capital city features the world's two tallest buildings. Despite the failures and scandals, Malaysia is very much the country that Mahathir wanted it to be.

Still, Proton faces a dilemma. Vehicle sales volume dropped by 25 percent in the first half of this year compared with the same period of 2002. Total sales from January to June 2003 were 85,430 units, representing a 53 percent share of total passenger car sales, down from 113,680 units or 62 percent in the first half of 2002. Now, as Mahathir gets ready to leave office and World Trade Organization tariff cuts loom - and Malaysians get rich enough to buy other brands despite the high tariffs - the national car is in increasing trouble. Malaysia's consumers increasingly want something else.

Malaysia has compounded its problems by coming up with a second national car, the Perodua, to add variety for consumers but actually contributed to the problem because the two government-funded carmakers cannibalize each other. Undaunted, Mahathir is to unveil yet another, a locally assembled multipurpose vehicle MPV to be sold by Naza Kia Sdn, the Malaysian distributor of South Korean's Kia Motors Corp. The MPV will be priced at less than RM100,000.

Part of it is that competing non-national brands such as Toyota, Honda and Kia have cut costs to the bone, generated dramatic efficiencies and pushed promotions hard in order to get at Malaysia's lucrative car market.

"With non-national make cars hitting the market well due to attractive pricing and models, Proton is losing out," said Pankaj Kumar, head of research of OSK Research, adding that unless Proton bucks up, such as by introducing new models quickly, the company will see its market share slip further.

Proton's latest model, the Waja, is three years old. And in an industry where the average lifespan of a car before another new model emerges is two to two-and-a-half years, Proton is not producing new models fast enough to meet consumer expectations.

Despite its pricing advantage, Proton will soon face uphill technological and innovation battles in defending its dominant market share. In order to boost sales, analysts say, it must come up with more interesting models to compete with new non-national passenger cars that feature next-generation automotive innovations such as intelligent automatic gearboxes and variable-timing engines.

For a major part of its existence, the company merely assembled the Lancer and put the Islamic badge on the front. That has changed steadily as local content has risen. Once it unveils a new model with its new in-house engine, the Campro, that will rise to 95 percent. But that is not expected before next year and in the meantime consumers are looking elsewhere. Some analysts have projected a further drop in Proton sales this year as consumers await better, improved models and in anticipation of cheaper prices due to the advent of the ASEAN Free Trade Agreement (AFTA) in 2005. Under AFTA, Malaysia is required to reduce import tariffs on automobiles and auto-related products imported from other ASEAN nations to between 0 percent and 5 percent by 2005.

If implemented, Proton and Perodua, the other national car maker, are expected to lose market share dramatically unless the government comes up with other non-tariff barriers to protect the two national companies, which is likely. Minister of International Trade and Industry Rafidah Aziz has said that higher excise taxes for cars are likely to be introduced to offset lost revenues from lower import tariffs.

Malaysia, however, also needs to liberalize its market under the auspices of the WTO, to which the country is a party. Under the WTO, participating countries are required to abolish unfair trading practices, including rules and policies in the compulsory usage of locally produced inputs for manufacturing of traded goods. Malaysia, therefore, is required to phase out several measures that are considered unfair trading practices to protect the local automobile industry. That includes a local content requirement policy by 2003 - but which was extended for two years.

Most analysts believe the government will seek to preserve the car. Apart from being the four-wheel symbol of Malaysia's industrialization, a number of government-owned entities have stakes in both Proton and Perodua and employ significant number of people both directly and indirectly through its network of dealerships and auto-parts manufacturers. Hence, to ensure that the dual goals are achieved - the realization of the vision to turn Malaysia into a developed country by 2020 and the protection of thousands of jobs - the survival of both companies will probably be ensured.

Indeed, says an analysis by a major multinational investment bank, "On a bigger picture however, its decision to back the new multipurposes vehicle "clearly shows the Malaysian government's lack of seriousness in complying with the issue of AFTA."

For instance, during the 1997-1998 financial crisis, most banks and finance companies were wary of giving out loans and consumer confidence had somewhat eroded. Government intervention came in the latter half of 1998 to relax some financing requirements, such as increasing the duration for hire purchase and increasing the percentage of car financing.

But despite the protection, Proton continues to struggle with high production costs that make local cars relatively more expensive than many foreign cars without tax and tariffs.

Proton spends a significant amount on research and development (R&D) and royalties paid to Mitsubishi for the use of its engine. Still producing only 200,000 units after 15 years, its volumes are too low to support stand-alone operations, according to an analyst. The company has been trumpeting the development of its own engine, the Campro, since 2001, which analysts said would likely cut its cost by about 30 percent. But in the meantime, the big global firms are designing engines with target production volumes of at least 750,000 units per year, while investing billions of dollars on hybrids and fuel-cell systems.

Some analysts disagree, saying that Proton is relatively new on the block whereas other giant motor companies have been around much, much longer and therefore Proton should be given time to catch up. A Mayban Securities analyst, for instance, said Proton is taking steps to streamline its operations, referring to the restructuring that took place recently that allows each division to offer its expertise and services to other firms and evolve into a profit-making centers.

Certainly, Proton is not going quietly. The company and the government intend to do their best to prove conventional auto economics wrong - in a time when there is a worldwide glut in automobile production. Proton ventured into Iran in July to make a series of sales presentations to Iranian institutions in a move to market its R&D and technical capabilities.

According to Proton's chief executive officer, Tengku Mahaleel Tengku Ariff, Proton today is not just about selling cars but selling its expertise, capabilities and resources combined with that of the UK-headquartered Lotus Group (of which it has an 80 percent controlling stake), also presents the company with the opportunity to sell these services.

Meanwhile, Kim Eng Research points to the initiatives Proton has taken to defend its domestic market share and grow its export markets. Firstly, it plans to cut cost by 30 percent by designing its own car, using its own Campro engines for all future new models and procuring quality components from cheaper sources. This is in addition to annual savings of over $50 million a year on payment of royalties to Mitsubishi for their engines.

The use of its own engines also reduces the effect of yen fluctuation on its earnings. Kim Eng estimates that every 1 percent appreciation in the yen translates to a 1.4 percent drop in Proton's earnings. The engine and transmission (which typically account for about 25 percent of the cost of a car) are currently imported from Japan. With the use of the Campro engines, the transmission will be the only major imported component, thus reducing its yen exposure drastically.

The establishment of Proton's Tanjong Malim plant (coined as Proton City) is also expected to cut costs and improve quality. The plant has the initial capacity to produce 100,000 units annually with the potential to churn out as many as one million cars, hopefully providing Proton the ability to reach the economy of scale it needs. This is in comparison to just 230,000 units produced by its plant in Shah Alam yearly.

The lower cost per car also fits into Proton's export strategy, which most analysts agree is crucial to its survival beyond 2005. Proton is currently losing money on its exports, which account for only about 9.2 percent of total sales. This is not surprising given its outdated models and high cost structure. With lower cost and newer models, it is Proton's intention to boost exports. The company has identified China, the Middle East and North Africa as key export markets, and is currently negotiating for joint ventures. It has entered into a joint venture with Goldstar in China and hopes to start produce 30,000 and 100,000 cars in 2004 and 2005 respectively.

In Iran, Proton's joint venture aims to sell 30,000 units per year. It has also submitted a bid to buy an assembly plant in Morocco to spearhead its thrust into the Northern African market.

While all these plans seem promising, all eyes will be on Proton when it rolls out its state of the art models in the next couple of years, and on how the market, both at home and abroad will take to them.

"We continue to believe that the survivaliability for Proton relies on two factors; (1) Continued government support and/or (2) The involvement of global majors in revitalizing its presence both in and outside the Malaysian market," says an analysis by a major investment bank. That sounds fairly ominous.

Malaysia Independence Day Supplement: Proton to consolidate position with new models Arab News

JEDDAH: Malaysian carmaker Proton, which has ambitious plans to expand its market share, is launching EXORA, its new multipurpose vehicle (MPV) and other new models in the Saudi market. “Although our market share in Saudi Arabia is moderate, we have drawn up a plan to promote our cars and consolidate our position in this highly competitive market in 2010-11,” Samer Ajjan, marketing manager of Proton (ARATACO), told Arab News in an interview. “Our performance in 2008 witnessed some growth, but is still less than our expectation. We are taking up the required measures in both sales and after sales, and it will further enhance our performance,” Ajjan said. Proton cars, though they are still new, have some unique features as standard equipment, he said, adding: “Our company is working hard to provide our customers with the best sales and after sales service, and at the same time maintain the competitive price of our cars and their spare parts.” Ajjan said the company was able to maintain its sales growth for the third successive year due to well-planned sales and marketing policies. “In this regard we would like to express our deep appreciation to Proton for their strong support for all of our promotional activities which helped us in achieving our target,” he said. Asked which of Proton’s models is the most saleable, Ajjan said: “Whenever there are plans to launch new models, it’s Proton’s policy to conduct a comprehensive study to evaluate and understand the needs of its customers. Proton thus gets the advantage of meeting the requirements of different segments of customers, and therefore all models are saleable.” Commenting on the Saudi car market, he said Saudi Arabia was the largest automotive market in the region and had a lot of potential, especially in the small vehicles sector even though there was tough competition in this segment. “We can overcome the tough competition by our unique quality, competitive price structure and prompt services,” Ajjan said. In fact, he added, the Kingdom is potentially a rich market for cars in all of its provinces and regions. “Therefore we are selling well all over the Kingdom.” He expressed his deep appreciation to Malaysian Ambassador Professor Omar Al-Saggaf and the diplomatic mission staff for their continuous support for Proton vehicles in Saudi Arabia.

Proton R3 Satria Mixes Malaysian Style With Lotus Tuning For Aussie Buyers

In addition to building a car for the Islamic world, Malaysian car company Proton also builds a number of cars for the Australian market, including the popular Satria GTi. As a way of previewing the next GTi, Proton will be showing off the R3 Satria, which was tuned with the help of Proton's motorsports arm. If you're not moved by the thought of a Malaysian company's tuners, we'd remind you that they borrow expertise heavily from Proton-owned Lotus. Though details are scarce, it sure looks mean enough to be a successor to the GTi. Press release below the jump.

Proton R3 Satria

Proton Gives A Hint To New Hot Hatch With R3 At Melbourne Motor Show

Proton will give Australia a sneak preview of its next generation hot hatch when it unveils the Proton R3 Satria at the Melbourne International Motor Show on February 29.

The R3 Satria has been developed by Proton's special vehicles and motorsport arm - R3, which stands for Race, Rally, and Research - at its headquarters in Shah Alam in Malaysia.

R3 is headed up by former Lotus engineer and prominent Malaysia race driver Tengku Djan Ley. The R3 Satria combines a range of special body enhancements as well as suspension development and a high performance power plant, to give the Satria Neo a true edge in the hot hatch arena.

At this stage the R3 Satria is still in development and no on sale date has been decided however the R3 division is working to bring the performance model to market as soon as possible.

While the type and configuration of the power plant can not be revealed at this stage R3 has targeted a significant power increase over the standard Proton Satria, which is powered by Proton's own Campro 1.6 litre twin cam multi-valve engine.

Alongside the R3 Satria at the Melbourne Motor Show media day will be Proton's new four-door Persona sedan, which will also be launched at the show.

According to Djan Ley the R3 Satria has been developed as a spiritual successor to the legendary Satria GTi, the first Proton to utilise the expertise and performance credentials of subsidiary company Lotus.

"We have very much focussed on the Lotus philosophy of performance through lightweight, utilising intelligent powerplant solutions while minimising weight and enhancing Satria's already impressive handling," said Djan.

"The Satria is a striking design and a great canvas for us to work with, I believe the R3 Satria will be a real hit at the show and draw a lot of attention," he added.

"However it is on the road where it will be really impressive but people will have to wait a little while before the R3 Satria hits the tarmac," he added.

Proton Cars Australia managing director John Startari said the presence of the R3 Satria on the Proton stand at Melbourne will be a huge drawcard during the fortnight of the show.

"The question we get asked all the time is when will the next Satria GTi be here, the first generation GTi carved a real niche for itself and it is a bit of a cult car, the R3 Satria certainly give some pointers to what its successor might look like," said John Startari.

"While we can't reveal too many details at this time Satria GTi enthusiasts can rest easy in the knowledge that a performance version of the new Satria is not too far away and the R3 Satria is evidence of that," he added.

As well as revealing the new Persona and R3 Satria, Proton will also show a full array of its Australian model line-up at Melbourne including the Savvy city car, Gen 2 hatch, Satria Neo and Jumbuck ute, recently named the cleanest and greenest ute in Australia by the Australian government Green Vehicle Guide.

SPORT STYLE MODIFIED PROTON WAJA

We have seen so many waja modified with VIP style and now we would like to introduce to all kdi readers about one of the waja modified sports version which is owned by Kamal from Blaze Motorsport. Sports style is one of the famous modification theme on a car nowadays which consists of many stuff, bodykit and decoration on the car.

SPORT STYLE MODIFIED PROTON WAJA

The rear GT Wing Spoiler with high adjustment and can be lowered down anytime.

17 sport rims 5 spoke which really express a sporty looks on the modified waja. Smoked tinted rear tail lamp and diffuser.

The interior is wrapped with fur on the dashboard, door trim and center armrest panel. Unique white panel on the dashboard meter.

Custom bumper DAMD style for waja, tinted head lamp and reshaped hood.

The extreme modified waja with the proud owner, Kamal Blaze Motorspor

PROTON CAMPRO TURBO ENGINE MODIFICATION

This is our picture archive while visiting Proton Technology Week, The campro turbo under development in a Proton waja campro turbo

The turbo boost meter inside the waja campro turbo.

The engine bay – using 1.6 litre campro engine, Malaysian made turbocharged engine giving better horspower and torque

You can see all the intercooler piping and intake hose

This one is fitted in the engine bay of proton Exora Prestige concept which is most probably the first proton model using the campro turbo engine on production line to be delivered in oct 2010. The theme of turbocharge engine is blue colour while red for campro CPS.

Talking about campro CPS v campro turbo, which one is better for you? Anyway, both have pros and cons. The CPS may be fuel efficient and the campro turbo surely got better power and pickup but the consumption must also be high. So if you need to add a little more power to your campro, a CPS engine conversion can be done which costs around RM3000 with new better than vtec alike system that will gives you better performance at the same time better fuel consumption.

PERFORMANCE MODIFICATION - PROTON WIRA 1.5 4G15

Message : model wira 1.5gli,engine 4g15..simple mod apexi super intake, voltage stabilizer, grounding wire, extractor 4-2-1, bullet n muffler straight flow, spark plug super4

Upcoming mod cable plug racing jasma,cam pulley adjustable, cam shaft n radiator adjustable..

KDI : A modification done on a Proton Wira 1.5 engine by pekakasari picture above. There are so many stuff to increase the performance of your Proton Wira and maybe we can discuss it here.

MODIFIED GEN 2 WITH EXTREME CUSTOM BODKIT - ARIVIN BLAZE

Proton Gen2, is a car with sports design genetic which is suitable for youngsters and even for family car. Arivin from Blaze Motorsports has made his ride with gen2 sportier and really satisfed doing an extreme modification on his gen2 which is so nice.

MODIFIED GEN 2 WITH EXTREME CUSTOM BODKIT - ARIVIN BLAZE

The interior quite simple with red reflective metallic colour on the dashboard panel and arm rest console.

MODIFIED GEN 2 WITH EXTREME CUSTOM BODKIT - ARIVIN BLAZE

custom modified bodykit fitted to all his gen2 skirtings. Original gen2 bumper is modified with new grill holes ads more sporty image on this gorgeous gen2.

MODIFIED GEN 2 WITH EXTREME CUSTOM BODKIT - ARIVIN BLAZE

Double exhaust tip with big diameter showing how good the exhaust system modification is done for the gen2 performance

MODIFIED WAJA EVOLUTION X EXTREME BODYKIT

New Contribution By Adycombat

MODIFIED WAJA EVOLUTION X EXTREME BODYKIT

KDI: Picture submitted by adycombat is about his modified ride, a Proton Waja with extreme modification impregnated with perfect bodykit of waja front design of Mitsubishi Evolution X custom bumper, hood plus the fierce looks intercooler. The modification includes engine modification which uses bigger capacity engine.

PROTON SATRIA NEO WITH SKYLINE BODYKIT.»

New Contribution by 47th.
Message:My car yg da di edit. Enjoy
Iz: Proton Satria Neo is made to be a sports car specially for youngsters and it is really looks sporty and fierce with this Skyline bumper.It also looks more wide and handsome and also a very nice modification.Good job.

PROTON EDAR TARGETS TO SELL 165,000 PROTON CARS

Proton Edar targets to sell more cars this year.Read the full news from Bernama below.

PROTON EDAR AIMS TO SELL 165,000 PROTON CARS THIS YEAR.

SHAH ALAM, Feb 3 — Proton Edar Sdn Bhd, the marketing arm of Proton Holdings Bhd, aims to sell 165,000 proton cars this year from 148,027 units last year, says Chief Executive Officer Mohamad Shukor Ibrahim.

He said the higher sales target stemmed from aggressive marketing strategies to compete with established car companies, introduction of new upper-end sedan model and rising consumer sentiment in view of improved economic outlook.

We’ll unveil new models towards the second half of this year to attract customers and excite the car industry amid the competitve market,” he told reporters after the Proton Drive for Holiday Campaign prize-giving ceremony.

Mohamad Shukor said the company sold 14,485 units or 14 per cent increase last month as compared with 10,134 units in the same period last year, driven by strong sales of Proton Saga, Proton Persona and Proton Exora.

He said Proton Edar was confident of consolidating its 257 outlets, including outlets under Edaran Otomobil Nasional Bhd and authorised dealers, to 191 by year-end.

He said the rationalisation would ensure profitability for all dealers and benefits to existing and new customers as a stronger network would improve services.

On challenges in the automotive industry, Mohamad Shukor said the likely increase in the overnight policy rate (OPR) this year would affect sales, adding that the market was currently enjoying lower rate over the last 20 years.

He said the hike in OPR towards the second half of this year was sensitive to the industry as banks would start tightening lending criteria while household finances become fragile following lower disposable income.

“We know the government is very supportive to the local auto industry. The co-relation between the performance of car industry and economic growth is very close,” he added.

MODIFIED GEN 2 WITH EXTREME CUSTOM BODYKIT – ARIVIN BLAZE»

Proton Gen2, is a car with sports design genetic which is suitable for youngsters and even for family car. Arivin from Blaze Motorsports has made his ride with gen2 sportier and really satisfed doing an extreme modification on his gen2 which is so nice.

The interior quite simple with red reflective metallic colour on the dashboard [...]

[ Click title to view more info & images ]

CAR RPM METER READING AT 100/110 KMH SPEEDOMETER READING»

Herewith I want to share some information from one of Malaysia Car Forum regarding the RPM meter reading while cruising at 100/110 kilometer per hour kmh speed for various car auto or manual transmission. Please share with us your meter reading while cruising at 100/110kmh here.

Note that this is the cruising RPM at your last [...]