There are a lot of people who feel that we just shouldn’t have had an automotive industry in the first place. Since Proton’s birth in 1983, the normal rakyat with average income have been forced to buy Protons. This is because of government protection in the form of high taxes on foreign makes.

Proton cars are perceived to be of inferior quality compared to foreign competitors. Many people say that when you buy a Proton, you need Lady Luck by your side. Sometimes you get a really good car, sometimes you get a lemon which spends more time in the service centre than being driven by you on the road.

Despite government protection, Proton’s market share has gone down from 57% in 1993 to 30% in June 2005.

On Monday, our ex-PM, the man whose Proton is his brainchild, made a somewhat sarcastic remark on these people who suggest that Proton should be closed down. Standard issue from Dr. M to make this type of statement. A quote from him:

If some feel one way to overcome the many problems we hear today is that we don’t have the automotive industry in Malaysia, we just close down.

Minister in the PM department, Datuk Seri Mohamed Nazri Abdul Aziz said that this is definitely not the solution. Closing down Proton would make 300,000 workers jobless. He says that it also affects the country’s dignity, and that Proton has also made many contributions to Malaysia’s automotive industry in the past 20 years since it’s inception.

However AFTA is coming soon, and Proton cannot be protected forever. We have already postponed the new tax structures in compliance with AFTA before. We cannot postpone forever.

Malaysians are sick of inferior cars at ridiculous prices. Some have suggested that one solution would be to source components from overseas so that Proton would be more competitive. This suggests that our local components are more expensive than what we could get overseas. How true this is, I don’t know.

But I wonder, the amount purchased by Proton would be the same as what they are currently getting from local manufacturers. Business is business. Even though the overseas component suppliers have the necessary economies of scale to be competitive in component prices, what reason do they have to offer Proton the same lower prices? The order amount is still much less compared to other huge auto manufacturers who sell many more cars than Proton per year. This is why a partnership has been suggested, such as the possible Volkwagen-Proton stake exchange currently being discussed.

These decisions are all made by the big boys up there, and what most of us care about is just getting a decent vehicle to drive around.

The Cabinet will discuss the draft National Automotive Policy tomorrow at it’s weekly Wednesday meeting. We all eagerly anticipate what’s in store for us car purchasers after AFTA is implemented.

But lately, all that has resulted from the noise about APs that directly affect us as car purchasers are Korean cars being made more expensive now because of the PGE tax.

Sources: Bernama, BusinessWeek, Bernama