Proton was conceived in 1985 by the Prime Minister of Malaysia at that time. The idea was to make Proton similar to Volkswagen in Germany where the car is designed and priced so that everyone can afford a car. The idea was good initially until the Malaysian government decided to introduce protection for Proton by way of imposing import taxes to force imported car prices up giving Proton an unfair price advantage. This bode well for Proton as it was the cheapest car in the market for many years until the emergence of Perodua in the 1990s. Proton's models we simple rebadge jobs of out going Mitsubishi models. Proton had practically no input in terms of product improvement or engineering. It was merely assembling outdated Mitsubishi models.
Proton's management did nothing to develop new models on their own and the second model introduced in 1992 was the Wira which was also a rebadged Mitsubishi Lancer. The quality of the cars continued to decline as corruption seeped into the Proton corporate culture which saw many low cost parts used. There were many rumours floating around in the automotive industry that part suppliers had to pay off directors and other personnel in position of influence to secure contracts and secure payment for parts supplied. Several vendors were also told to charge full price for certain parts in their invoice but supply lower quality parts with the price difference given as kick-backs to Proton personnel. The cars were also deemed low quality and lacked the necessary crash safety.
This habit of corruption was the real decay in Proton. As a result production cost of Proton cars went up significantly and this drove the Malaysian government to further increase the import taxes and imposed a new excise duty for cars. This made Proton arrogant to the point that if a car buyer didn't like Proton, Proton would tell them not to buy their cars. Proton at this juncture could not produce cars fast enough and customers had to wait up to 6 months for a car. Instead of investing the money it made wisely into engine technology (which is the heart of the car), Proton instead took the glory route and bought Lotus which was dying at the time. Lotus saddled Proton with its debts and took a massive toll on Proton's bottom line. Proton until today is keeping Lotus alive at the expense of its profits.
Proton only introduced its own home grown designed model with help from Lotus in 2004 which was the Gen2. Proton claimed to have spend over US$300 million to develop this model which many believed that more than half the amount was siphoned out by the management in corruption money. The Gen2 was considered a fresh look to Proton, however the car's engine was poorly designed as it lacked torque and the fuel consumption was higher than its Japanese competitors. The build quality was also poor with bad reliability for power windows and terribly hard plastics and poor sound insulation.
Proton also introduced models that no one wanted to buy. The models were the Tiara, Juara, Arena and Savvy.
Proton's status as top selling car in Malaysia was also lost as Perodua over took Proton sales with it's Myvi which offered a current design rebadged model of a Daihatsu Boon. Proton had no answer for the ever growing Perodua competition. Proton's corrupt corporate culture was their Achilles Heel. Proton kept looking to the Malaysian government for assistance and after over 20 years of making poor cars and living off the protection provided by the Malaysian government, it was time for Proton to show that it was capable of making decent cars that the Malaysian public would want to buy rather than forced to buy because of price. With the long history of selling poor quality cars, the Malaysian public if given a choice would not buy a Proton. The Malaysian automotive industry lost out tremendously when the big auto makers decided to invest heavily in Thailand as the Malaysian government continued to protect Proton.
Proton lost the plot when it started becoming arrogant and complacent with government protection. Proton is aware that without government protection, it will not survive. Most Malaysians who can afford to buy a car can't wait for the day to come when the protection for Proton is removed completely giving them the real chance to choose the car they wish to buy with their hard earned money.
With the impending general elections approaching in Malaysia, if the Opposition coalition party wins, Proton's future is in doubt. Overall as a so called national car maker, Proton was a huge let down and a huge burden for the Malaysian public.
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