PM: Proton needs to cut car prices to compete

PM: Proton needs to cut car prices to compete
Thursday March 23, 2006
URL: http://thestar.com.my/news/story.asp?file=/2006/3/23/nation/20060323161955&sec=nation

KUALA LUMPUR, Malaysia (AP) - National carmaker Proton will have to reduce prices to counter growing foreign competition after the government announced measures to liberalize Malaysia’s auto industry, the Prime Minister said Thursday.

"The prices of Proton (cars) will unavoidably be reduced. Proton has to compete,’’ Prime Minister Datuk Seri Abdullah Ahmad Badawi told reporters.

The government Thursday cut excise duties on foreign cars and reduced import duties for vehicles made in Southeast Asia from 15 percent to 5 percent under a policy aimed at making Malaysia a regional auto industry hub.

"Proton has to have a price on its products which will be acceptable by the market. This is extremely important, they know it. It is up to the management to decide,’’ Abdullah said.

The tax reduction comes nearly two years ahead of the Jan 1, 2008, deadline for Malaysia to open up its auto industry under a free trade pact between the 10 members of the Association of Southeast Asian Nations, or ASEAN.

Abdullah, who is also finance minister, said Proton won’t be hurt by the tax cuts because it would expand overseas and focus on growing its exports.

"Proton has indicated to me that it has no problems with the national auto policy because it is ready to compete,’’ he said.

"For them to survive, Proton must grow big and be competitive. Right now, it has a very small capacity. There is room to improve.’’

Once the king of Malaysia’s auto sector, Proton has seen its dominance challenged by foreign car makers as tariff barriers that shut them out for decades have been progressively lowered under the ASEAN Free Trade Area.

Its share of the domestic passenger car market dwindled to 41 percent in 2005 from around 60 percent in 2002.

But higher car sales helped Proton to return to the black in the three months ended December after two consecutive quarters of losses.

It has said it planned to tap the large consumer markets in China and India as part of efforts to export 100,000 cars by 2008.

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That’s just what we all need, eh?

“We can’t compete with others, so therefore we shall compete with price.”

In the long run it’ll usually mean the quality of the product will degrade, as we’ve seen over and over again. What’s the point of cutting the prices? Proton should concentrate of improving its image (whatever that’s left of it) and quality!

What we’re seeing that’s already happening is that Proton is cheapning its products. The 1992 Proton Saga, though it has many faults, is many ways much more superior feature-wise to the current short rear Proton Saga. That, plus the darned thing is an obsolete, unsafe (by today’s standards) design.

I know I should be supporting local products. I DID (by buying a Proton few years ago) and I have to say it was the worst decision of my life. Sure it was relatively cheap to maintain, but the quality problems and time-wasted going to fix it are just far too many for me to list down. That, and I have headaches just thinking about it. OK, I’ll just list one - the rear plate lights that always collect rainwater in them and lasting 3 months if changed. (Ended up not bothering to change them)

Proton has no direction. It should be aiming at the mid-range market (competing with the Honda Civic or Camry, for example) instead it finds itself making models that run over each other’s market segments.

For example, the Perodua aimed for the niche in creating small efficient cars, and they stuck to that (aside from the Rusa van, which no longer exists in the product line) and are aiming for exactly the kind of market.

Where is Proton? Where are they aiming at? It’s like they are all over the place and getting no where. For example:

The new Proton Saga is a 4 door hatcback, and so is the Gen2. Both have around the same engine size. (1.6, 1.5 and 1.3) and the Gen 2 is newer and larger. Why not just concentrate on one model range with a more aggresive price range, and drop the obsolete Saga?

Then there’s the Savvy. Why would they want to aim at a lower market and compete with Perodua? And what kind of LOW END market has a need for SEMI-AUTOMATIC GEARBOX?

Then there’s the newest model, I forget the name, but it’s basically a stretched Waja. Isn’t the Perdana a luxury car and more suited to being a limo? And they both used the same engine. What’s the point of all that? And the Waja - my friend who owns one refers to its interior as ‘tupperware’. His steering volume controls flew off after using it a couple of times (car still new). And the Waja was bragged to have highest European safety standards and fails to live up to it? And remember its aggressive market aiming at big shots like BMW? Germany can rest easy…

And remember the Juara? Have they even done market research for it?

Proton is a failure in my book. They let their products sit still, cut into each other’s markets, really fail to innovate (name on thing innovative from them), and have no idea what market they are targeting (actually, i think they really have no clue). And they own a famous brand (Lotus) but let it to waste by not fully utilizing its capabilities, buy a failing motorcycle company but we don’t see and advantages from it. Where are they? If you look outside of Malaysia, it took only 10 years for Hyundai to successfully enter the US market and elswhere, and Proton is struggling even in their own country after 20 years in existence.

What a waste.

No deny bout that…

[quote=“ian”]That’s just what we all need, eh?

“We can’t compete with others, so therefore we shall compete with price.”

[/quote]

yeah!! if doesn’t want to compete with the price then compete with the QUALITY…
but i dont think PROTON can do that…

[quote=“brianvavo”][quote=“ian”]That’s just what we all need, eh?

“We can’t compete with others, so therefore we shall compete with price.”

[/quote]

yeah!! if doesn’t want to compete with the price then compete with the QUALITY…
but i dont think PROTON can do that…[/quote]

Not with where they are currently heading at least.