Brendan Moore

Reprinted from - ONLY REGISTERED AND ACTIVATED USERS CAN SEE ALL LINKS - CLICK HERE TO REGISTER - complete except for image of 2006 Proton Savvy
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Automaker Proton Will Not Get Bailout, Says Malaysia

By Brendan Moore

05.22.2007

For those of you that have been following the Proton saga, the latest is that the company is still looking for an investor/partner, the two leading candidates for this potential partnership are still GM and VW, and the current majority owner, the government of Malaysia, says no way to a government bailout.

Proton has sustained losses ever since Malaysia’s new-car market was opened up to outside competition, and the talks aimed at finding a partner have not gone well. The government’s official stance on the matter is almost nonchalant; they exude optimism that a partner for Proton will be found shortly. However, in their private discussions, it is believed that Proton’s ebbing fortunes and their cloudy future have the Malaysian government quite concerned. The government owns Proton through a state-investment firm named Khazanah Nasional Bhd.

Both GM and VW could use the manufacturing capacity and the market presence that Proton would give them in the part of the world Proton currently operates in, but so far the asking price has just been too high. It appears that both GM and VW are prepared to wait.

Proton, launched in 1985 under a previous government administration, has a large, very modern plant north of Kuala Lumpur that is currently under-utilized by approximately 60%. This plant would provide any new partner with instant low-cost production capacity in Southeast Asia, whose population is eager for car ownership, and is also, not incidentally, twice that of the United States at around 600 million people.

Proton has a deserved reputation for making cars that are of mediocre quality, has models that are as old as 10 years old that have been virtually unchanged in those 10 years, has a poor service and parts network; and once the market was opened up, Malaysians voted with their wallets, snapping up Toyotas, Nissans and Kias. With their domestic market collapsing, and no real presence in any foreign markets, Proton is on shaky ground. If a sale doesn’t happen soon, there won’t be much value left in the company.

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phaeton

Well written article Brendan

They should hurry up and choose someone before they get to deep in the red IMO.

While GM may wait VW is already looking at either partnering up with another Malaysian Industrial Co, or Vietnam & Indonesia have been reportedly in VWs sight.

I was talking to a dealer at the Melbourne Auto Show and he agreed with me that VW would be the best partner for the company.

With GM slowly fighting its way back and already having a presence in the region with Daewoo and Holden, I really don't see the need for them to buy another company.

Mirage77

We have certainly great potential for low-priced continental makes. Right now our closest competitors to those are Chinese cars or Korean cars, I'd love to see a low-cost VW-engineered car.

Brendan Moore

Yes - I'd like to see VW pick up Proton as well, for the same reason. VW could certainly use the low-cost manufacturing base, and the location is just a bonus.

Remy Zero

PROTON has to be sold, IMO, for them to recover. the automobile market is very competetive. i really hope they VW takes over them, and improve the cars. they just suck big time now.

Mirage77

Ha, how very apt. I agree. A bailout soon or they are in trouble.

Remy Zero

actually, they're already in trouble....long time ago. they still are using old tech for nowdays cars, tech which are over 10 years old.

they do so called 'facelifts' and brand them as latest models from proton, at a cheaper price, when in reality, it's just an old model that can't be sold.

to be honest, Proton cars are just not worth the buy at all. for the amount of money u pay, might as well invest in a proper Japanese car, say like a Vios or something like that.

what i don't get is, with Proton already doing so bad, why is the Goverment so reluctant to take it's next step and sell it to VW. Look how VW turned Lambo's fortunes around. it's only logic, IMO, for Proton to follow suit.

phaeton

Don't forget Skoda, SEAT, Bentley & Audi all turnarounds by VW possibly Bugatti in desirability status

I know the Proton Salesmen/women want VW not GM but as said above the Malaysian Government are holding onto a lost cause

Remy Zero

GM? GM themselves are in trouble, and they wanna stick their noses into other people's business?

right now, i gotta admit the fact that VW is the best bet, in terms of a good organized management to oversee proper operations and development, and of cos, not to mention....their resource power

Mirage77

A proton can buy a Japanese car in M'sia? Egad! The closest thing we can get for say, a Savvy, is a Chinese car or with a little top-up, a Picanto... Well that isn't the point. I'm well aware of how Proton uses old Mitsubishi parts. But I believe some of the 'Lotus handling' did get into some of its cars - in spirit at least - as I do remember a few reviews praising the handling of Proton's latest products.

Anyway, the government is holding on to Proton because of national pride more than anything else. I believe their terms of agreement is too unreasonable for any carmaker to swallow. So unless the government relents, they're not gonna let go of Proton anytime soon.

Curb Zone