Proton is targeting to boost exports in a bid to stem falling profits due to dwindling local sales, the Business Times reported yesterday.
Despite the recent launches of two highly-anticipated models – the Prevé and the Suprima S – and the Saga SV and Persona SV value-added range, the company sold 138,753 units locally last year, down from the 141,120 the year before. Its share of the Malaysian passenger car market has also declined from 25.6% in 2012 to 24.1%.
Speaking to reporters at the opening of Lotus’ first 4S centre in Beijing, Proton executive chairman Tan Sri Mohd Khamil Jamil claimed that this was caused by stiffer competition from foreign carmakers but also public perception.
“Many urbanites are buying Proton cars as they believe in the product and technology. But still, there are people who say our cars are expensive as they are locally-produced. It is quite impossible to lower car prices with the rising costs of doing business,” said Khamil.
Khamil also hit out at the Malaysian buying public, saying that he does not understand why they are not supporting their own products. “Look at the Japanese and how they are supporting their carmakers. Another example is South Korea, which supports local players like Samsung and Daewoo.”
Squeezed out of their breadwinning local market, Khamil said the company is looking to cut costs wherever it can – including the standardising of car spare parts – which would improve its economies of scale, enabling itself to price its cars more competitively.
“Our profits are shrinking with rising costs. For the new Saga SV 1.3, the nett profit is below RM500 and it is shocking,” he added.
On the problem of public perception, Khamil said that the company must produce more value-for-money cars, adding more safety features. “Our latest technology focuses on passenger safety, such as the drop-down engine upon impact from an accident. This lowers the chances of fatality.”
“We have high-level engineers and designers working on Proton cars. Today, we hear fewer complaints about Proton cars.”
Proton is also eyeing its overseas markets to expand, an area which had been rather neglected in past years – while the company is exporting cars to 25 countries worldwide, sales in foreign markets are still below five percent.
In particular, the company is reportedly focusing on its key markets – the United Kingdom, Australia and Egypt. Australia has already received the Suprima S, Prevé and Exora, and plans to introduce new cars to the UK have been in place for some time.
Another avenue to expand the company’s business is in China, where it is currently under a strategic partnership with Youngman. The deal, created in 2007, sees Proton being paid royalties from Youngman in exchange for CamPro engines and CKD kits of the Persona and Gen2 (the Youngman Lotus L3 pictured above).
Proton is planning to build its own cars in the Middle Kingdom soon, according to company advisor Tun Dr Mahathir Mohamad, riding on the success and growth of its subsidiary Lotus.
“However, to enter the Chinese market, we need to manufacture the cars in China and that will involve huge capital investments. We are looking at partnerships,” the former Prime Minister added.