Since Geely took over Proton in the last few months the new CEO from China has made some drastic changes in the attempt to turn the company around and fix all the existing problems that plagued Proton. It is no means an easy task but without making drastic changes Proton can never return to its former glory days. The company was saddled with under performing staff, over inflated prices for parts due to excessive corrupt practices by the management and procurement team and inefficient operations.
To stop the bleeding of funds, the new CEO informed all existing suppliers to reduce their costs by 20% or face being replaced by China sourced suppliers. The second thing was to change the terms and conditions of the dealers. The dealers' margin period was slashed and those without sufficient funds would be terminated. The third thing was to change the management structure to weed out under performing staff.
The cost cutting exercise will eliminate many suppliers who were feeding Proton staff in exchange for supply contracts. It was estimated that Proton would save more than 15% on cost just by cutting cost on parts. It would also force the corrupt employees to think otherwise.
Streamlining the dealers agenda was to reduce the dependency on small dealers and focus on building 3S and 4S large dealerships that could provide a better overall image of the brand and also provide the necessary support for the car owners. Proton previously had one of the lowest customer satisfaction ratings in the country. The old management did not pay much attention to customer satisfaction due to the Government protection however since the competition from Perodua and other car makers made it harder for Proton the old management style was doomed.
Geely will introduce their car designed models with a Proton badge in 2018 after going through some research and development work to convert the model from left hand drive to right hand drive. In 2018 it will be a big transition year and it is unlikely that Proton will start making profit. The profit may start to come in 2019 when sufficient models have been introduced.
Geely will need sufficient time to revamp the entire business and create customer confidence. Traditionally Malaysian buyers have not really accepted China made cars due to quality concerns but with the existing dealership network the confidence will start to grow and soon Geely may find Malaysia as their largest export market.
It is also very likely that Geely will start to utilise more of Volvo's technology since Geely owns Volvo. This is a plus point for Proton. The probably of selling a better designed car is always a positive point.
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