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Chan Mei Ting & Low Pooi Yee; August 2007

Perusahaan Otomobil Nasional Berhad or PROTON was incorporated on May 7, 1983 to manufacture, assemble and sell motor vehicles and related products, including accessories, spare parts and other components. Based on technology and parts from Mitsubishi, PROTON produced Malaysia's first car, the Proton SAGA, commercially launched on July 9, 1985 by then Malaysian Prime Minister, Dato' Seri Dr. Mahathir Mohamad, who had originally conceived the idea of a Malaysian car. The first manufacturing plant for PROTON is in Shah Alam, Selangor. Initially the components of the car were entirely manufactured by Mitsubishi but slowly local parts were being used as technologies were transferred and skills were gained. Beside that, Proton Perdana based on the Mitsubishi Eterna, was first produced in 1994, intended for higher end market. By 2002 Proton held a market share of over 60 per cent in Malaysia, which was reduced to barely 30 percent by 2005 and is expected to reduce further in 2008 when AFTA mandates reduce import tariffs to a maximum of 5%.

PROTON is more of a political hot potato and it is the Malaysia’s biggest carmaker and brings the big incentive to economic growth Malaysia. However, PROTON has become worse and faces several problems nowadays. It can demonstrated by the report of September 2006, it had showed that Proton’s loss widened to RM58.6 million in the first quarter ended June 30 from 12.4 million ringgit a year earlier as customers bought fewer Proton cars because the company lacked new models. Sales of the company based in Shah Alam, outside Kuala Lumpur, fell 31 percent to RM1.42 billion. Beside that, according to the industry expert, Malaysian carmaker Perodua has overtaken its lumbering competitor Proton to become the nation's leading manufacturer thanks to a nifty new model. In a telling tale, Proton's new Savvy model launched a year ago has been ignored while Perodua's Myvi with its better looks and high-quality interior has a nine-month waiting list and is outselling the Savvy by six to one. "Most people perceive the Savvy as less reliable, more problems with the quality. It's all hearsay though, possibly because of previous Proton models being that way," said AmResearch analyst Gan Kim Khoon.

Therefore, it may imply that PROTON has the bad reputation or bad image among the customer perception. PROTON “really needs to accelerate its model line-up”, said Wan Azhar Wan Mustapha, an analyst at OKS Research Sdn. Bhd. As the result of introduce more new and nifty model, it will easier attract more customer to purchase PROTON car and increase the market share of PROTON. Moreover, according the carmaker expert stated that this is not a good year for Proton. This is because competition for PROTON is stiffer, and consumers are become wiser nowadays. Furthermore, Proton will likely suffer because of the high bank loan and standard of living in Malaysia is low. Due to the low to low-medium income of certain population in Malaysia, Some of them are unable to buy a new car because they have to handle a high interest rate that set by the bank when they want to borrow loan. Beside that, some of the consumer have other loans on hand like house loan, thus it make them not having a strong credit rating. People are already reluctant to buy new cars because they get very low unattractive price fro their used cars, now they face another problem which is getting a loan to buy a car to replace their traded-in used car. In this situation, show that consumer has meet a lot of obstacles they want to purchase a new car. Therefore, it directly influence the sales of PROTON is going down.

As a conclusion, the problem of PROTON has caused by internal and external factors. The internal factor refers to the insufficient of new car model which mean they are low in creativity and innovative in designing car. Moreover, PROTON also lack of car expert to provide technical support in manufacturing cars. Additional, due to the intense competition nowadays has become an external factor to PROTON. For example, PERODUA had designed nifty new model such as Myvi has successfully launching the car and taken a lot of market share from PROTON. Hence, PROTON needs the engineering know how of a truly world class manufacturer. It needs the product range and pipeline of a carmaker with global economies scale. In needs the brand power and reputation of a serious car company to pull the PROTON brand name out of the smelly armpits of local disgrace.

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Har Wai Mun @ 2007