Proton's collaboration with Suzuki

Proton recently signed a collaboration deal with Suzuki to rebadge Suzuki cars with the Proton brand. this move looks likely to benefit Suzuki more than Proton. Proton needs more models to sell without investing heavily in R&D since most of its in-house developed models have not been well received with the exception of the Saga due to its entry level price. Prior to the collaboration Suzuki have only been selling the Swift model with moderate sales figures. Other models such as the Kizashi and Vitara have been very slow selling. Suzuki has been known for small cars and the Vitara but since the first generation Vitara and Jimny Suzuki has not really made much impact in the Malaysian market.

The collaboration with Proton will allow Suzuki to excess the Proton dealership network and sell more cars. The first model to be introduced is the Ertiga which is a small MPV with a 1.4 litre gasoline engine. This model is popular in Indonesia and it is likely to do well in Malaysia too. Small MPVs are particularly popular in this region as it is viewed to be a versatile vehicle for small families and also for people doing small business. Priced around RM60,000 it is affordable and it could give Perodua's Alza a run for its money. However, it will also potentially kill off Proton's own Extra MPV. The price is very close and since the public know that the Ertiga is essentially a rebadged Suzuki they are more likely to favour the Ertiga.

Confidence in the Proton brand is at its all time low. Without new models they are likely to struggle with sales. Buyers who have a choice will opt for either Perodua models or entry level Japanese models from Honda, Toyota or Nissan. Proton is desperate for sales to stay afloat despite the Malaysian Govt offering some financial backing. The only reason for this backing to keep the Proton employees in their jobs. If Proton shuts down thousands of Proton factory workers will be unemployed.

Malaysia's domestic car market is not big enough to sustain a car factory unless there is significant exporting of cars. Thailand has become the automotive hub in South East Asia and is perfectly capable of producing enough cars to supply to Malaysia. Proton's domestic sales volume is nowhere near high enough to justify the cost of running full fledge factory. Australia is a good example where the automotive industry has died. Holden and Ford have closed their factories and Toyota now source their vehicles from Thailand or Japan directly. Malaysia is likely to follow that route soon.