Proton's survival

In the recent released 2014 car sales statistics for Malaysia, the combined sales volume of Proton and Perodua dipped below 50%. This meant that the dominance of the local cars are weakening and the consumers have made choices to buy non local made cars. This is the first time in 25 years where a local car has not dominated the car sales figure in Malaysia. Proton's enemy is not the foreign brands but Perodua. Perodua has consistently chipped away at Proton in the initial years and when the Myvi was launched this model put tremendous pressure on Proton to introduce new models to compete.

The Myvi was almost single handedly forced Proton to work rather than just be complacent with their existing models thinking the Malaysian public will keep buying their out of date models. Perodua was far more innovative and had newer products that appealed to the public.

Proton is now facing certain doom at the rate it is going. All it is doing is revising their existing models by adding more accessories and simple parts to spruce up its image. The facelifted models with additional kits are costing far more than the public is willing to pay for and Proton struggles to sell at higher prices as the it still has the cheap image tagged on it. It is also clamoring for survival by trying to find cooperation partners in China, Middle East and Indonesia. Without fresh new models and improvement in quality it will continue to struggle. The competition from Japanese and Korean brands which are now very established are very difficult to beat. The design and product development teams of Korean and even Chinese car companies are much larger than Proton and all have much larger economies of scale which also means lower costs of production.

Proton is like in a state of limbo where it cannot really get out of this current predicament without new models and wavering support from the local market does not help. The only way out would be for Proton to focus on rebadging and assembly rather than designing new models. Proton's capacity to design new models is just not up to par with other car companies.

The question remains is whether its founder Dr. Mahathir will let it shut down or bail it out using tax payer's money.