After months of retracted discussions, offers and counter ofers, denials and reluctant admissions, the Malaysian government has finally decided that Proton will end all discussions with all foreign parties that were touted as possible 'strategic' partners to the national car company.
The immediate reaction from the market is all too familar of course. Proton shares dipped and analysts and observers are all not too happy with this sudden turn-about.
Lets take a closer look at this latest addition to the colourful history of Proton sans the emotional baggage.
As it stands, Proton will continue to function as it has always done previously .ie. it will be a sovereign car maker. This, according to the government is because of the following reasons:
1. Proton has increased its market share from from about 20% plus to over 30% now and is well placed to increase it further
2. The Persona is doing well and more new models are on the way
3. Proton has entered the Chinese and Iranian markets.
4. Hence, Proton is strong enough now and can avoid a fire sale situation.
To be honest, Proton is definitely in a much better position than it was a few months ago. If you remember, I wrote about the Persona and said that it was indeed a good car. So, its not suprising that the Persona is doing well. However, I also said that one new model maketh no new future. May I also add that breaking into the Chinese and for that matter Iranian markets maketh no new future either. At the risk of oversimplyfying the issue, let me just say that these two markets are huge but extremely unpredictable. Will Proton be able to withstand any upheavels in these two markets?
Every major car manufacturer knows that the success of each new model is a hit-and- run story. To have a series of top selling back to back models is not impossible but not something that can be taken for granted either. Perodua did well with its models because it entered a market segment which at that time was less crowded and was able to carve out a nice little market share for it self unlike Proton that competes in a highly competitive market segment.
Also, what about the huge financial outlay needed to develop fresher models? The technology aspect of this is another matter all together.
Finally, have we forgoten the competition from India, Thailand and China? Can Proton single handedly withstand these competitions which will inevitably be about quality, price and volume?
On the other hand, I must admit that I am less pessimistic about Proton than most others simply because Proton has two critical advantages : huge production capacity and it owns Lotus. If these two advantages are leveraged we just might be able to have another world beater from Malaysia. The only question is that the whole Lotus issue is unclear. Also, I would suspect that Proton needs 2 new models next year. The Saga replacement is targeted somewhere in the first few months of 2008. I think Proton should not wait until 2009 for the proposed MPV. It should do that in 2008. This will give confidence to the market of Proton's seriousness in avoiding past mistakes.
Finally, I would also suggest that Proton look to India. Every major car maker is looking to India. In fact Suzuki is back on the automotive radar courtesy of its Indian market.
There is no turning back now for Proton. The next time it invites another car maker for strategic tea-talk, it has better be in good shape! We Malaysians will always wish the best for Proton. But, we will not be so forgiving anymore with our power-windows either!
