Proton: The Sick Child

How well is Proton's health these days? It was in the red a while ago. Recent reports say that it is now in the black, which is a good thing for the estimated 100 000 people who are directly and indirectly involved with its business of manufacturing cars. Proton, once a dream of the previous prime minister which has been realised may also be the nation's pride and glory. To many it is but not to some who have experienced the down side of their cars. Hear says, probably the truth, mention that the first batch of Proton Sagas are rather good in quality as they are made by Mitsubishi and assembled here.

Since then, the quality of Proton cars have dropped significantly. Why is this so? Some blame it on the mentality and the Malaysian culture of "tidak apa" attitude. I, personally would think so too. All Proton gets these days are critism about their plans, performances, products and management but to be fair, they also got some positive remarks. I reckon these positive remarks are made because these markets have not yet seen the worst of Proton. Maybe very soon, the world will hear of more complains.

Proton's failure to capture Volkswagen as a foreign partner shocked investors and also their management. Volkswagen, being Europe's largest car manufacturer with a number of familiar and high quality associated car brands under their wing announced their decision to step out of the negotiations which stalled as an effect of the Malaysian government's disapproval of the bid by VW to have majority shares. This resulted in VW not being able to commit to earlier discussions. VW was willing to share its platforms and technologies with Proton at the expense of 51% of shares of the joint-venture company without having management control. Which in my opinion is a good term. However, the PM's response (more like the cabinet's) was that the national interest should be the utmost importance.

I do not see the national interest being challenged strongly or ripped away from us, Malaysians. Infact the JV could even boost or create pride in the hearts of the people regarding Proton. The term "another Skoda" isn't very appealing, though. Skoda's run-away success with VW behind them generated enough revenue to actually contribute to 9% of the GDP. Imagine Proton contributing that amount to the economy. Malaysia's GDP stood at about USD 100 billion in the year 2004 (if i'm not mistaken) and 9% would make close to USD 10 billion. That is more than 3 times the amount they are contributing today. Proton has definately more capacity than Skoda. Already having the distribution network overseas and the infrastructures plus the technology, there is no doubt that Proton can generate more income for the country and most definately make better cars. They need a doctor and they need it urgently. Maybe Mitsubishi could help but they need a specialist. Not a company in the red.