Wednesday, December 17, 2008

Proton:The Failed Experiment of Dr. M and UMNO

Article from : http://www.malaysiawaves.com/2008/12/its-about-time-someone-stands-up-to.html

It seems Pakatan Rakyat state governments are standing up to Proton. So far, Perak, Selangor, Kedah and Penang has expressed their utmost desire to change their official cars from Proton to another brand.Selangor feels that they should change to a 4x4 while Kedah wants to change to Toyota Camry. They all agree. Proton gives them lousy cars that breaks down all too often and it costs them an arm and a leg to repair the cars each time they breakdown. But then again, it's what most Malaysians have experienced through and through.

Proton:The Failed Experiment of Dr. M and UMNO

According to most economists, for a car manufacturer to break even and reach Economies of Scale, they must be able to produce at least 1m cars per year.

Proton, at it's peak when it controls 65% of Malaysian domestic market only managed to produce 227,000 cars. And to make matters worse, Proton has never exported more than 20k cars per year.


So, it has now become a white elephant. It itself is a drain on our economy.

The funny thing is that Dr Mahathir was warned of Proton's impending failure back when the project was about to start. The consultants warned him that Malaysia just doesn't have a population big enough to provide a domestic market large enough to sustain Proton into a profitable entity.

According to them, a car manufacturing nation must have a population of at least 40m people. In fact,countries like Indonesia and Thailand would make a better country to have a national car.

Proton Cons Malaysians Just to Survive

According to a study conducted by JD Powers and Associates,Protonhas the worst quality among all cars in the Malaysian market. It doesn't take a consultancy like JD Powers to convince average Malaysians about how "crappy" Proton is. I mean, a Toyota Corrolla 1979 is more reliable in terms of quality then a Proton Wira.

We've all had experience with Proton Wira. After using them for 3 years,we've probably changed at least 20% of all the parts in the car. The same goes story with Iswara and Waja.

In short, it's a crappy car and it's quality is non-existent.

But then again, there's nothing wrong with a low quality car. What's criminal is when the low quality car is sold at medium quality price range. Recall that for a Proton Wira 1.3 was sold at RM45-50k. The loan period is usually 5 years and one have to pay at least RM500 and above for it's installment.

For someone earning RM3k a month, that's almost 17% of one's income per month. Adding maintenance cost per month plus tol and gasoline, the total cost for maintaining a car runs to about 25% of one's income.

Then we have not even begun to talk about the price of Proton's spare parts. It's another area where Proton makes a killing and the spare parts rarely last more than 2 years anyways.

Isn't that criminal? A Proton Wira with the quality Malaysians are familiar with should be sold at not more than RM20k all in. In other words,Proton is making more than 100% profit above it's supposedly value. Plus they're making a killing out of services and spare parts.

In some countries, for RM50k you can actually buy a high quality Sedan like Hyundai Sonata.

How Does Proton Gets Away with Murder

Simple.What Dr Mahathir did was he jacked up the import duties of all other cars between 40%-300% range. Thus making other brands much more expensive to buy. So, that way, even if the price of Proton is doubled from it's true value, people will still feel it is cheaper to buy a Proton.

This made Proton uncompetitive. They are shielded and protected. They know they can come up with a wreck to sell and Malaysians will be forced to sell it. Kinda like car companies under the former Communist countries like Yugo and Skoda.

But since this is a Dr. Mahathir white elephant and so call national pride, none can say anything about it.Malaysians just have to bear the sufferings of owning a Proton and having to pay through their noses for a car that's so bad in quality.

Proton Prevented Malaysia from Becoming Asia's Automotive Hub

Because of Malaysia's refusal to liberalize the Malaysia's car market in order to protect Proton, major car manufacturers of the world like BMW and Mercedes chose Thailand instead of Malaysia to set up their Asia hub.

Now instead of Malaysia, Thailand is known as "the Detroit of Asia". Think of how much opportunities could have been created if Malaysia was chosen instead of Thailand?

Think of the amount oftechnology transferred, the number of jobs created, the amount of capital inflow into Malaysia, the hike in Malaysia's GDP. Think of how much good it will do to Malaysia.

And Proton workers will be the biggest beneficiary of all. Suddenly they will find vast job market for them work in. If they use to be a engineer in Proton, they could easily be chief engineer in some other plants and so on.

But because we want to protect Proton, we do away with all these opportunities just to protect the ego of one man name Dr Mahathir Mohammad Iskandar Kutty.

And let's take a peek at what Dr Mahathir's ego has prevented Malaysia from getting in terms of investment:

"Investment is pouring in. Last year(2003), Ford unveiled plans to spend $500m to expand production. Nissan, having forked out $190m to increase its stake in its local joint venture, is now investing another $250m on new assembly lines. Toyota will spend $750m, both to increase capacity and to set up a research and development facility. Even Mitsubishi,which is struggling elsewhere, has found $525m to invest in its boomingThai operations."


Proton Have Lousy Parts Manufacturers Too

The Proton Suppliers and Parts Manufacturers are also lousy. One of them is Ingress owned by Rameli Musa.

The guy tried to expand his business to Thailand and Indonesia but to no avail his effort have failed so far. So, he is reliant on Proton for the core of his business because of the monopolistic nature of his business.

So,when there is a potential regime change in Malaysia to Pakatan Rakyat,he started to panicked. He then influenced PAS leaders to form unholy alliance with UMNO in the spirit of Malay supremacy and unity.

The real reason for this is because he knows PAkatan Rakyat will favor liberalization of auto market and removal of protection for Proton. In an open market Ingress will fail just like it's failing in Thailand and Indonesia. So, whatever the means he must make sure BN will not fall.

All the story about Malay Supremacy and Malay dominance is nothing but hot air. The truth is he wants to protect his bread basket. So, let the corruption continue for all he care.

The story of Rameli Musa's involvement in bringing PAS to BN is told to us by Raja Petra Kamaruddin, if one were to recall. It's another example of a Malay entrepeneur being afraid to compete in the real world.


It's Time for Proton to Stop Conning Malaysians

As one article from The Economist puts it:

"Proton represents all that was wrong with Dr Mahathir's Malaysia: a firm born of nationalist ideals not commercial rationale, protected by old-style cronyism and never exposed to real competition. Like its creator, the best thing may be to let it go gently into retirement."


Conclusion

I am glad someone is standing up to Proton. Let Proton learn their lesson and realize that their bullying of Malaysian days are over. It's time forthem to wake up and smell the coffee.

Go ahead Pakatan states. Goand buy Toyota Camrys, Toyota Harriers, Range Rovers etc.Just stop buying Protons. Lets teach them a lesson they will never forget.

Tulang Besi

http://www.malaysiawaves.com/2008/12/its-about-time-someone-stands-up-to.html

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