Domestic Sales

Proton’s domestic car sales are up by 17.5% in August – 11,786 units – compared to the 10,018 units in July, which was in turn 21% higher compared to the 8,328 units sold in June. Proton Edar Dealers’ Association (PEDA) is confident September sales would follow the trend and breach 14,000 unit sales. Sales targets for this year will likely be reduced though, after reevaluation of market conditions. Proton’s previous target was to increase market share for the financial year of 2007 to 45.8 percent, from 2006’s 41.4 percent. Proton’s current market share to date is only 32.4 percent, which is a big drop from the 2006 financial year. Satria Neo sales have been 2,750 units so far, with 4,000 orders in hand since it’s launch since June. The figures outperformed estimates set by the company.

More after the jump…

Financial Status

While Proton made a loss in Q1 2006, it’s expected that on the overall, the company’s year 2006 financial performance will be profitable. The previous financial year had also shown a loss in Q1, but on the overall the financial year ended with a profit of RM779 million. However, we should note that this year’s losses were 3 times the amount lost in the same quarter last year, so comparing the numbers, turning around to profit this financial year should be tougher.

Inventory

Some dealers were holding stock of between 2.5 million to 3.5 million as of July, which translates to about 45 to 65 cars. There were some dealers who had it really bad, holding more than 100 units during the period. On average in an urban area, a dealer has to sell 30-40 cars a month to break even but some dealers were only doing fewer than 10 cars a month. Sales and production amounts are being monitored closely, and Proton wants to make sure stockpiles of cars do not exceed two months worth of production. Proton is working hard to clear it’s 2005 stock.

Quality Control

Warranty claims for the Proton Savvy and the Proton Satria Neo is currently at an average of 0.5%, which was quoted to be an improvement.

New Models

Proton acknowledges that a big problem with their sales is the lack of a fresh model range. Proton is making sure it’s new model development programs will result in new models that are designed according to market needs, not niche segment models. This will be very important for Proton to increase sales volume. This would mean no new niche models e.g.: pseudo-pickups, sporty hatchbacks. Volume = family sedans that are cheap enough for the bulk of the rakyat to buy, e.g.: perhaps an Iswara replacement? Two new models will be launched by mid-2007. Previously there was news of a car by the year end, but I guess this means it’s launch date is pushed back to before mid-2007.

Exports

Proton plans to increase CBU exports to the UK and Australia, as well as CKD assembly in Indonesia, Thailand, the Middle East and Eastern Europe. Proton is also studying the feasibility of CKD operations in China and India. Export shipments for the whole of 2005 was 13,512 units, while the exports for this year to date is 12,519 units – this means this year’s exports would exceed last year’s. Proton intends to raise exports to 100,000 units by the year 2008.

Proton also recently subscribed to an additional 255 million redeemable convertible preference shares in Proton Marketing Sdn Bhd at an issue price of 1 ringgit each – a total of RM255 million ringgit. This is to facilitate recapitalization and debt restructuring of Proton Cars (Australia) Pty Ltd and Proton Cars (UK) Ltd. Proton Marketing Sdn Bhd bought an additional 24 million redeemable shares at 1 pound each – 24 million pounds (RM164 million) in Proton Cars (UK) Ltd and additional 32.1 million shares in Proton Cars (Australia) Pty Ltd at 1 AUD each – 32.1 million AUD (RM89.5 million)

Partnerships

There are exploratory talks with PSA Peugeot Citroen. The talks with China’s Chery Automobile is also still underway, as previously reported in Proton’s Bursa Malaysia announcements. Second finance minister Nor Mohamed Yakcop says Proton and it’s majority stakeholder Khazanah Nasional (the government’s investment arm) are studying whether Proton needs a foreign investor or local entrepreneur’s help. “More and more, we think that there could be a role for a foreign investor who is in the motor industry to play an important role in bringing Proton to a higher level,” said Nor Mohamed Yakcop.

Sources: 1, 2, 3, 4, 5