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Monday, December 15, 2008

It's About Time Someone Stands Up to Proton

It seems Pakatan Rakyat state governments are standing up to Proton. So far, Perak, Selangor, Kedah and Penang has expressed their utmost desire to change their official cars from Proton to another brand. Selangor feels that they should change to a 4x4 while Kedah wants to change to Toyota Camry. They all agree. Proton gives them lousy cars that breaks down all too often and it costs them an arm and a leg to repair the cars each time they break down. But then again, it's what most Malaysians have experienced through and through.

Proton:The Failed Experiment of Dr. M and UMNO

According to most economists, for a car manufacturer to break even and reach Economies of Scale, they must be able to produce at least 1m cars per year.

Proton, at it's peak when it controls 65% of Malaysian domestic market only managed to produce 227,000 cars. And to make matters worse, Proton has never exported more than 20k cars per year.

So, it has now become a white elephant. It itself is a drain on our economy.

The funny thing is that Dr Mahathir was warned of Proton's impending failure back when the project was about to start. The consultants warned him that Malaysia just doesn't have a population big enough to provide a domestic market large enough to sustain Proton into a profitable entity.

According to them, a car manufacturing nation must have a population of at least 40m people. In fact, countries like Indonesia and Thailand would make a better country to have a national car.

Proton Cons Malaysians Just to Survive
According to a study conducted by JD Powers and Associates, Proton has the worst quality among all cars in the Malaysian market. It doesn't take a consultancy like JD Powers to convince average Malaysians about how "crappy" Proton is. I mean, a Toyota Corrolla 1979 is more reliable in terms of quality then a Proton Wira.

We've all had experience with Proton Wira. After using them for 3 years, we've probably changed at least 20% of all the parts in the car. The same goes story with Iswara and Waja.

In short, it's a crappy car and it's quality is non-existent.

But then again, there's nothing wrong with a low quality car. What's criminal is when the low quality car is sold at medium quality price range. Recall that for a Proton Wira 1.3 was sold at RM45-50k. The loan period is usually 5 years and one have to pay at least RM500 and above for it's installment.

For someone earning RM3k a month, that's almost 17% of one's income per month. Adding maintenance cost per month plus tol and gasoline, the total cost for maintaining a car runs to about 25% of one's income.

Then we have not even begun to talk about the price of Proton's spare parts. It's another area where Proton makes a killing and the spare parts rarely last more than 2 years anyways.

Isn't that criminal? A Proton Wira with the quality Malaysians are familiar with should be sold at not more than RM20k all in. In other words, Proton is making more than 100% profit above it's supposedly value. Plus they're making a killing out of services and spare parts.

In some countries, for RM50k you can actually buy a high quality Sedan like Hyundai Sonata.

How Does Proton Gets Away with Murder

Simple. What Dr Mahathir did was he jacked up the import duties of all other cars between 40%-300% range. Thus making other brands much more expensive to buy. So, that way, even if the price of Proton is doubled from it's true value, people will still feel it is cheaper to buy a Proton.

This made Proton uncompetitive. They are shielded and protected. They know they can come up with a wreck to sell and Malaysians will be forced to sell it. Kindda like car companies under the former Communist countries like Yugo and Skoda.

But since this is a Dr. Mahathir white elephant and so call national pride, none can say anything about it. Malaysians just have to bear the sufferings of owning a Proton and having to pay through their noses for a car that's so bad in quality.

Proton Prevented Malaysia from Becoming Asia's Automotive Hub

Because of Malaysia's refusal to liberalize the Malaysia's car market in order to protect Proton, major car manufacturers of the world like BMW and Mercedes chose Thailand instead of Malaysia to set up their Asia hub.

Now instead of Malaysia, Thailand is known as "the Detroit of Asia". Think of how much opportunities could have been created if Malaysia was chosen instead of Thailand?

Think of the amount of technology transferred, the number of jobs created, the amount of capital inflow into Malaysia, the hike in Malaysia's GDP. Think of how much good it will do to Malaysia.

And Proton workers will be the biggest beneficiary of all. Suddenly they will find vast job market for them work in. If they use to be a engineer in Proton, they could easily be chief engineer in some other plants and so on.

But because we want to protect Proton, we do away with all these opportunities just to protect the ego of one man name Dr Mahathir Mohammad Iskandar Kutty.

And let's take a peek at what Dr Mahathir's ego has prevented Malaysia from getting in terms of investment:

"Investment is pouring in. Last year(2003), Ford unveiled plans to spend $500m to expand production. Nissan, having forked out $190m to increase its stake in its local joint venture, is now investing another $250m on new assembly lines. Toyota will spend $750m, both to increase capacity and to set up a research and development facility. Even Mitsubishi, which is struggling elsewhere, has found $525m to invest in its booming Thai operations."

Proton Have Lousy Parts Manufacturers Too

The Proton Suppliers and Parts Manufacturers are also lousy. One of them is Ingress owned by Rameli Musa.

The guy tried to expand his business to Thailand and Indonesia but to no avail his effort have failed so far. So, he is reliant on Proton for the core of his business because of the monopolistic nature of his business.

So, when there is a potential regime change in Malaysia to Pakatan Rakyat, he started to panicked. He then influenced PAS leaders to form unholy alliance with UMNO in the spirit of Malay supremacy and unity.

The real reason for this is because he knows PAkatan Rakyat will favor liberalization of auto market and removal of protection for Proton. In an open market Ingress will fail just like it's failing in Thailand and Indonesia. So, whatever the means he must make sure BN will not fall.

All the story about Malay Supremacy and Malay dominance is nothing but hot air. The truth is he wants to protect his bread basket. So, let the corruption continue for all he care.

The story of Rameli Musa's involvement in bringing PAS to BN is told to us by Raja Petra Kamaruddin, if one were to recall. It's another example of a Malay entrepeneur being afraid to compete in the real world.

It's Time for Proton to Stop Conning Malaysians

As one article from The Economist puts it:


"Proton represents all that was wrong with Dr Mahathir's Malaysia: a firm born of nationalist ideals not commercial rationale, protected by old-style cronyism and never exposed to real competition. Like its creator, the best thing may be to let it go gently into retirement."



Conclusion

I am glad someone is standing up to Proton. Let Proton learn their lesson and realize that their bullying of Malaysian days are over. It's time for them to wake up and smell the coffee.

Go ahead Pakatan states. Go and buy Toyota Camrys, Toyota Harriers, Range Rovers etc. Just stop buying Protons. Lets teach them a lesson they will never forget.

Tulang Besi

18 comments:

Anonymous said...

Because of Proton, a generation of Malaysians have a large portion of their incomes squandered by high costs of cars across the board and their maintenance thereof. This sinful waste of fund is a direct loss towards other beneficial expenses such as housing, education etc, not to mention that many have got themselves into financial trouble for this very reason.

For the pride and ego of one man, tens of thousands of Malaysians had suffered and suffering.

Anonymous said...

The Auto industry had been screwed up the last 20 years. Proton is only one part of the problem. Well run companies like Cycle and Carriage had their Mercedes franchise forcefully split up and shared with other distributors. If they refused they would not get any APs which became a permit to get cars in. Many makes were affected, Toyota, Nissans, you name it it's probably affected. It made many established car distributors poorer but made some new kids on the block cronies richer. It's a crying shame and it's you and I who are paying for it. Don't believe? Then ask yourself why we are paying an average of RM300,000K for a Mercedes whereas an Australian pay less than half? Part of the difference goes into paying for the AP which in turn goes into someone's pockets. The Mercedes brand doesn't even compete with Proton as it's a luxury car but all the same it gets hit so that someone can get richer.
There are a lot of horror stories about the car industry and too much to tell. Only a change of govt will correct all the abuses and manipulation.

Anonymous said...

One manager who once works for a Proton distributor once told me the negotiations between Proton and Volkswagon was nearing a fruitful conclusion but came to an abrupt end because a certain SIL wanted his palms greased to get the final approval for the tie-up. Volkswagon just walked away in disgust. That's why Proton is still in the doldrum that it's in, too much corruption in the industry and too many political interference. It's a bloody shame.

Tulang Batu

Anonymous said...

That is what pariah Mahathir is at good !
Malaysia will continue to pay for his mistakes even after he is no longer the P.M. !!
Don't you think it is time the real and full blooded Malays kick him out of this country and stop calling him and his pariah children Malays !!!
He is a pariah Indian and if you are unable to find someone with better brains but find anyone but the pariah !

najib said...

That is for pariah Mahathir trying to be someone he can never ever be !
Generations later will continue to pay for his dreams. Pariah !

chong said...

thanks for the story.

proton definitely can't stand on its own. it is too notorious. it would take too huge the cost to rebuild it. without the government protection, it will go into distinction for sure.

Anonymous said...

Proton is only an assembly plant, why do malaysian keep refering o them as a car manufactuter. we seliing old face lift mitsubshi as our national car....hahaaaaaaaa. thousands of workers in assembly plant was laid off while they send thousands to Japan to learn ho to assembled old cars. rememeber Fiat started their assembly plant in Johore in the 60s.

amoker said...

I was glad to get rid of my Proton Satria. It cost me a bomb to buy that ridiculous priced car.

John Bastille said...

A well written piece. Kudos to Tulang Besi.

If the malays want to stick to Ketuanan Melayu, they would be causing their children's inevitable future failure in achieving competitive advantages and knowledge. Shielding a domestic market, denying that Malaysia exists in a global village would only lead Malaysia downwards.

However, removing Ketuanan Melayu should not be seen as removing Malay rights. A proper governance has to be implemented where the Malays continue to be supported but the laws of the land cannot be seen as discriminatory.

Anonymous said...

Sorry to say that Malays never learn. In Melaka, Tun Ali (Tamil Muslim) was manipulative and self-serving, and the Sultan had no choice but to retire him in order to build Melaka empire. Tun Kudu was sacrificed in order to meet his 'retirement' condition. Tun Perak was promoted Bendahara, and Melaka advanced to greater heights.

Fast forward 1980's - Tun M Iskandar Kutty became PM. Everything was built around him, no for the country's glory. He put forward so many things that didn't make commercial and economic sense (to us and the country). Looking back, it all makes sense to enrich a certain group of people, at the expense of the rakyat and country's good name!

We should never make the same mistake again, and put people of merit, not race or religion, to run the country. If the country 'dies', we all die together. We should make those governing the country to sign Code of Ethics and conduct too, because if they put their dirty hands in the kitty, we should sue the hell out of them, and get back everything owed to the rakyat!

donplayplay

Satish said...

I know many people will lose their jobs,..
but in the long-run, I feel it would be best to SHUT DOWN PROTON as it is just not worth having.

http://satishsran.blogspot.com/2008/06/is-proton-worth-having.html

Anonymous said...

to be fair to proton, I think this is a very one sided and myopic view of proton and the local car industry. thats all i have to say. there are way too many holes in this piece to be credible. in fact, it seems like it was written in the past. In 2005, I would probably agree wholeheartedly with this article. but today, I think it doesnt take into account any new developments.

also, there are many factual errors also.

dont ask me what, but some basic research on the facts will prove it.

Tulang Besi said...

Dear anon,

One question: Has Proton managed to produce one million cars per year?

Gunblade said...

Seems that's you are talking about Proton but not enough reasons to bash it. If you want to talk about proton please get the latest news. Don't give Proton Wira as example. It already been replaced by new model. If you just want to conclude that Pakatan states should buy others rather than Proton, just said it straight. You are just telling about the history without looking at what is happening to Proton in the present.

Satish said...

The NEP is just protecting Proton by making foreign cars SO ExPeNsIvE.

Why can't it be fair ?...because they know nobody would by a Proton if the NEP was fair.

NEP protecting Proton only prevent people to buy their dream cars.

That reason alone is enough to criticise Proton to the max...besides its crappy quality.

Anonymous said...

Kutty has lied and cheated Malaysians for his own benefits. He has to encrich a few cronies to get them to support him. But how many billions he had stolen and lost through his stupid pride.
Is he smart? Stories were told that his failures were because he was deceived into many committments either knowingly or unknowingly cos big $$ involved.
So now you all suffer.
The C&C story is just part of his high-handed way to twist arm to get his ways.
This mamak taught twisted thoughts to the Malaysians; UMNO inherited the "values" from him' RPK said when talk to non-Malys they would use one pretence; when face the Malays they would teach them not to trust the non-malays.
Kutty calls himself a Malay;you accept him and his lies; you still "adore him" and let him get away with his lies; you pay for it.
For how long? You answer yourself, till you can be covinced and rejected all mamaks once and for all only then the sky will begin to clear.
Kutty is a curse, nothing more than an evil incarnate in our history book.
He has ruined our beloved country entirely.

Anonymous said...

i bought a satria neo last year...mostly becoz i got enthralled by the sporty design. but on the day of delivery itself, the car came to me with fogged right-sided headlight (from the rain) plus the cushions were so dusty..i thought i was given a used unit..after refusing to accept the car, the sales agent took it for some "fixing-up" and brought back the car, a bit cleaner but without the fog..two days later when it rained heavily, the headlight fogged up again and has been doing that every time it rains. needless to say, no more protons for me. i keep getting conned by them every time. it is one lousy brand. i can go on and on and on about my previous experiences with other proton cars having had driven a perdana, a savvy, a saga...but they all have the same sad story line...and oh..never believe a single word printed on their glossy brochures..my satria never returned any more than 10.8km/litre petrol in the most ideal driving conditions (air-con off at 90km/hr)..

wish I could have my money back. i'll take any other brand any time.

Anonymous said...

oops correction..i meant my satria never gave any less than 10.8 litres petrol per 100km travelled..

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