By Mohd Khairil Azman
When Proton made its debut in 1983, there was lots of pride and excitement to go around. The same feelings exist to this today.
We, Malaysians are proud of our national car and some of us continue to buy Proton. However, based on news reports Proton appears to be at a crossroads, facing serious financial challenges.
For the sake of our country, it is our hope that the new management will be able to resolve Proton’s legacy issues and turn the company around.
Having said that, there are lessons from the past which must be learnt in order for Proton to move forward.
So, what actually went wrong with Proton? Some past misadventures of Proton must be highlighted.
The first misadventure started in the mid-1990s when Proton acquired a majority stake in Lotus.
It’s impressive that a Malaysian company was able to acquire a British company – but nonetheless many may not know that Lotus was not in the best of financial health then. There were reports that suggested Proton had spent possibly more than RM4 billion over the years to revitalise Lotus.
Two pertinent questions need to be asked – will Lotus ever make money for Proton? And is it fair for Lotus to continue getting a lifeline at the expense of our national car Proton?
Secondly, in 2004, Proton bought a controlling stake in MV Agusta for a reported value of EUR70 million.This wasn’t a wise move. There were simply no operational, engineering, and technological synergies between Agusta (which produces motorcycles) and Proton as a car maker. A year later, the then Prime Minister Abdullah Ahmad Badawi decided to cut Proton’s losses by selling off its stake in Agusta for EUR1 – but the company which bought it over then had to assume Agusta’s debt, worth EUR107 million.
All in all, Proton lost about RM500 million within that one year when Agusta was under its ownership. Had that sale not been made, Proton may have faced losses of about RM1 billion had Agusta failed. We understand that Agusta is still struggling.
Former Premier Dr Mahathir Mohamad was not happy with the decision. He was reported as saying: “Losing automotive companies like Rolls Royce, Bentley, Skoda, Lamborghini, Aston Martin and many others have been bought by stronger companies and have been turned around.”
Thirdly, about five years ago, an agreement was signed between the government and Proton, in which the former agreed to provide more than RM200 million for Proton’s venture into the EV Project. We were told that a large sum of money had been disbursed by the government to Proton, yet there has been no significant progress achieved thus far. Again, this is money down the drain
Proton’s target of producing its first EV car through Frazer-Nash by 2014 remains a distant reality. Although it started about four years ago, the Malaysian public has yet to see any outcome of this project. The EV project is no easy task. Other renowned manufacturers such as Nissan have failed in similar ventures – through its Nissan Leaf EV Project. It is not going to be easy for Proton either to pull it off.
All in all, while Proton is now considered a private entity under DRB-Hicom, it remains our national car project and the government cannot neglect Proton during these difficult times.
Having said that, we need to be fair in our assessment – yes, the government has gradually reduced its assistance to Proton, but the increasing level of competition by other manufacturers has also resulted in Proton losing its market share. Proton is a company and therefore it has got to compete with other car makers.
The Malaysian public has been supportive of Proton but it is Proton which has failed to live up to their high expectations. All you need to do is ask any Proton owner how many of them have had a problem with their car’s power window. Most of them will say “yes” – and the sad truth is that this is just one of the many problems plaguing the national car maker.
The government needs to help Proton, but they must be cruel to be kind. No help should be given unless Proton has in place a sustainable restructuring plan.
We wish the new management of Proton all the best. At the same time, since the government has been supporting Proton all these years using our money, we want answers to Proton’s many misadventures. We also want assurance that these mistakes will not be repeated.
Mohd Khairil Azman is an FMT reader.
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