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.
Thursday, 14 December 2017
Using Cryptocurrency to buy cars
The cryptocurrency revolution is by far the biggest piece of news for 2017 and it is set to pave the way for the future. The impact of Bitcoin and other secondary coins are really shaking things up. Previously economist and financial experts were laughing at the possibility of using cryptocurrency for transactions or to purchase real world items but more and more people are proving them wrong and it won't be long before the economist and financial experts find themselves swallowing their own words!
Earlier this year a young man in America bought a Lamborghini Huracan using the profits he made from investing in Bitcoin at a very early stage. The total investment cost was only US$115 worth of Bitcoin which appreciated in value tremendously to well over US$10,000 per Bitcoin. He sold some of the Bitcoin he had and bought the Huracan. This news went viral as it was the first time anyone realised their profits from investing in Bitcoin to purchase a high ticket item.
Yesterday a man from China bought US$5 million worth of old Formula One cars (4 units) using Litecoin. No one knows if he bought the Litecoin from an exchange or if it was mined using his computers. Regardless how he obtained the Litecoin the fact in the matter is that he was able to materialise the transaction and successfully purchased the Formula One cars.
The early adopters will be the biggest benefactors of the cryptocurrency revolution and it will definitely change the face of purchasing vehicles. I believe it won't be long before more car dealers will accept some form of cryptocurrency as a mode of payment. There are hundreds of cryptocurrencies in the market now but the main few remain the ones that are most popular. The speed of transaction when using cryptocurrency will enable faster purchasing process of the cars and makes it a lot easier than relying on bankings and paying ridiculous bank fees.
The impact on the banking sector will be huge since many people who know how to mine cryptocurrencies will be able to buy cars with far less cost and it may do away with loans altogether. Consider this: a person is able to mine a Bitcoin over 1 year and the Bitcoin value reaches US$20,000 each, to buy the car the person is literally paying only the cost of electricity of running the mining machine and internet line so the cost acquiring the Bitcoin is less than US$4,000 (depending on country's electricity tariff). This means the person buying the car is only paying US$4,000 for a US$20,000 car!
For the dealers it has a positive impact too. With the cryptocurrencies increasing in value every month, any form of cryptocurrency held accepted by the car dealer will appreciate in value and increase the profits for the car dealer.
It is unsure how many dealers will quickly make the transition to accept cryptocurrencies but it is likely that we will see some early adopters in 2018.
Earlier this year a young man in America bought a Lamborghini Huracan using the profits he made from investing in Bitcoin at a very early stage. The total investment cost was only US$115 worth of Bitcoin which appreciated in value tremendously to well over US$10,000 per Bitcoin. He sold some of the Bitcoin he had and bought the Huracan. This news went viral as it was the first time anyone realised their profits from investing in Bitcoin to purchase a high ticket item.
Yesterday a man from China bought US$5 million worth of old Formula One cars (4 units) using Litecoin. No one knows if he bought the Litecoin from an exchange or if it was mined using his computers. Regardless how he obtained the Litecoin the fact in the matter is that he was able to materialise the transaction and successfully purchased the Formula One cars.
The early adopters will be the biggest benefactors of the cryptocurrency revolution and it will definitely change the face of purchasing vehicles. I believe it won't be long before more car dealers will accept some form of cryptocurrency as a mode of payment. There are hundreds of cryptocurrencies in the market now but the main few remain the ones that are most popular. The speed of transaction when using cryptocurrency will enable faster purchasing process of the cars and makes it a lot easier than relying on bankings and paying ridiculous bank fees.
The impact on the banking sector will be huge since many people who know how to mine cryptocurrencies will be able to buy cars with far less cost and it may do away with loans altogether. Consider this: a person is able to mine a Bitcoin over 1 year and the Bitcoin value reaches US$20,000 each, to buy the car the person is literally paying only the cost of electricity of running the mining machine and internet line so the cost acquiring the Bitcoin is less than US$4,000 (depending on country's electricity tariff). This means the person buying the car is only paying US$4,000 for a US$20,000 car!
For the dealers it has a positive impact too. With the cryptocurrencies increasing in value every month, any form of cryptocurrency held accepted by the car dealer will appreciate in value and increase the profits for the car dealer.
It is unsure how many dealers will quickly make the transition to accept cryptocurrencies but it is likely that we will see some early adopters in 2018.
Wednesday, 6 December 2017
what Success and failure of F1 means to car companies
It is obvious to see that success in F1 can be a great promotional boost for a car manufacturer. Take the example of Mercedes in the recent years. The road car sales have shot up through the roof setting new records year after year. The sales success from the showroom is nothing short of staggering. Mercedes really capitalised on their racing success and it made many new buyers turn to Mercedes.
On the flip side, Honda suffered tremendously in F1 with numerous engine failures which did affect their road car sales to some degree. Despite the failure in F1 Honda did not suffer a major setback in sales but their image took a beating. Being a trusted brand the road cars were still selling but it lost its image as front runner for engine technology.
Toyota also suffered a similar fate when it failed miserable in F1 10 years ago despite investing almost $1 billion and had nothing to show for it.
F1 is an expensive and cruel sport that can reward or punish the car company image-wise. Ferrari made huge steps forwards in terms of brand image and marketing from their success in F1 15 years ago at the hands of Michael Schumacher. Now Mercedes is doing the same thing with Lewis Hamilton.
Being able to compete in the top 3 will yield good marketing mileage for car companies but once numerous engine failures and DNFs start appearing it definitely doesn't bode well for the image.
It is a big gamble for any car manufacturer and with ever changing regulations it is all about who gets it right and makes the most of it. with every rule change one company or one team will be able to capitalise on it. There seems to be like a trend with an era of success for one particular team just like how Ferrari was the top for 5 years then came Mclaren then Redbull and now Mercedes. the fortunes for the teams change and the change can be very drastic.
In the mid 1990s Williams won 2 constructor's championships but after the second championship the car team was nowhere near the top 3 and were struggling with mid field teams. It just goes to show that one year's success does not mean that it will translate to similar results the next year. this is the cruel part about F1.
Mercedes is now enjoying their reign of success but no one knows how long this will carry on for and who will be the next to enjoy a reign of success.
On the flip side, Honda suffered tremendously in F1 with numerous engine failures which did affect their road car sales to some degree. Despite the failure in F1 Honda did not suffer a major setback in sales but their image took a beating. Being a trusted brand the road cars were still selling but it lost its image as front runner for engine technology.
Toyota also suffered a similar fate when it failed miserable in F1 10 years ago despite investing almost $1 billion and had nothing to show for it.
F1 is an expensive and cruel sport that can reward or punish the car company image-wise. Ferrari made huge steps forwards in terms of brand image and marketing from their success in F1 15 years ago at the hands of Michael Schumacher. Now Mercedes is doing the same thing with Lewis Hamilton.
Being able to compete in the top 3 will yield good marketing mileage for car companies but once numerous engine failures and DNFs start appearing it definitely doesn't bode well for the image.
It is a big gamble for any car manufacturer and with ever changing regulations it is all about who gets it right and makes the most of it. with every rule change one company or one team will be able to capitalise on it. There seems to be like a trend with an era of success for one particular team just like how Ferrari was the top for 5 years then came Mclaren then Redbull and now Mercedes. the fortunes for the teams change and the change can be very drastic.
In the mid 1990s Williams won 2 constructor's championships but after the second championship the car team was nowhere near the top 3 and were struggling with mid field teams. It just goes to show that one year's success does not mean that it will translate to similar results the next year. this is the cruel part about F1.
Mercedes is now enjoying their reign of success but no one knows how long this will carry on for and who will be the next to enjoy a reign of success.
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