DR M FOOLING MALAYSIANS ON THE NATIONAL CAR

By : STEVE YAMAN

IN HIS recent Bernama interview, Dr M seemed to be very proud of the national car. Proton had its share of teething problems in the early years. The latest Preve model first 1,000 cars launch should not have so many problems because Proton had been manufacturing cars for almost three decades since 1985.

Did Proton do anything to withdraw the cars and immediately rectify the problems or make good the 1000 initial cars? Toyotas and Hondas, in the past few years, had their share of withdrawals and rectifications.

When entering into the car industry and market, Dr M already knew that Proton was going to compete with the giants of the automobile industry all over the world in a very high technology market.

Proton had teamed up with Mitsubishi in order to launch the 'national car' and for more than two decades Mitsubishi had a hand in the joint design, engineering and production of Proton cars. Why is he complaining that Proton is losing out to other imported brands?

Proton cars had so many problems and the body was like a “Milo” tin car – you had only to lean on it to make a dent on the body. There were two models – one for Malaysia; and totally different and superior specifications for the export market to Europe and America.

The superior export models were sold at lower prices than the domestic models. So, Malaysians got an inferior version at a higher price. For some time there were insufficient service centers; and the demand and sales dwindled.

Dr M had very ambitious ideas about export markets. A very good example is the Philippines; Dr M went to the Philippines and promoted the idea to President Ramos.

The idea took off and there were showrooms opened all over the country. There were insufficient service centers and parts to repair the car when it broke down. Proton was of lower standard to compete with other brands like Toyota, Honda, Mazda, Nissan, Kia, Hyundai, Ford, etc.

The price of Proton was comparable to the other brands of imported cars in its class but the quality and after sales service was below par. So, most people preferred to buy the Japanese, European or Korean brands rather than Proton. Soon we could only see a few Proton cars on the streets of Manila compared to other imported car brands.

Dr M is talking about the practice of “open trade” but he made it more expensive to buy imported cars. The Malaysian government made sure that Proton had better advantages to imported car in the Malaysian market. Proton had subsidies and grant; and the full government backing to ensure that it is cheaper than imported car.

The national car had the advantage of better financial backing or hire purchase service provide by EON Bank and other banks. Even with the backing of the government and the financial services, the foreign brands are selling better than Proton.

When the first Proton appeared on Malaysian roads in 1985, the Proton Saga received the nickname 'Potong Harga' meaning 'cut-price', the car was at least 20% cheaper than non-Malaysian makes in the same 1.3 to 1.5 liter class.

With both the low price protection by the government and national pride working for it, Proton initially got a rapid hold on the market in Malaysia. By 1988 Proton, with a model line up, had overtaken all other makes and models in its class; and grabbed 73% of the Malaysian passenger car market. But soon the demand started to fall to as low as 26% with the introduction and competition of Produa.

Government policy has kept the Proton cheaper than other makes by the simple strategy of taxing the competitors, while giving Proton exemptions or rebates from these same taxes. Duties on packages of parts for assembly into complete cars in Malaysia is said to average about 30%.

Proton is exempted from most of these. How much difference does it make on the recent move to reduce import duties for cars from Australia and Japan? Why are import duties reduction confined to just cars from the two countries?

The very latest update to the Malaysian Automotive Policy framework (October 2009) failed to mention any change in this discriminatory rebate policy, thereby reinforcing the suspicion that the Government will not abide by stipulated "level playing field" requirements.

It should be noted that the main “solution” being pushed by the Malaysian Government to maintain the pricing advantage of locally made cars, by providing grants and subsidies (to counteract any potential removal of the excise Duty rebate) would also be deemed to be non-compliant with the Trade Agreement, contravening Non-tariff barriers to trade requirements.

The lack of direct competition at Proton models' price points (in Malaysia) has also allowed Proton, for many years, to continue selling very outdated designs, generally with scant regards to providing basic safety equipment such as airbags and anti-lock braking in domestic models.

Protons have poorer rankings in quality than the available competition. In contrast to what Dr M is saying, it is only natural that Malaysians do not trust Proton. The price is not cheap and the quality is questionable and outdated compared to other imported brands. How can Dr M claim that Proton is of superior brand?

Proton started out with Mitsubishi from the initial years until March 2004 when they completely sold their entire stake in Proton. Proton acquired Lotus, had joint venture arrangements with Renault. Proton overseas sales in Europe, Middle East, USA, ASEAN and mainland Asia were unimpressive and there is limited success in China and Australia.

The green initiative and the reduction of the use of fossil fuel are still far beyond the reach of Proton at this point in time. Proton is still very far behind in terms of technology and reputation in comparison to other manufacturers such as Toyota and Honda in hybrid cars.

What Dr M mentioned in his Bernama interview are just ambitious ideas at the expense of the people. The government has been spending too much to achieve too little and even with Mitsubishi, there was lack of technology transfer in the partnership. Instead the Japanese was dumping outdated and inferior technology for Proton to pick up, manufacture and sell within our country or export (that was why Proton had to modify the export version but sell at a lower price).

Why has the government provided Proton with so much grants, subsidies and protection for inferior quality compared to imported cars? In many countries around the region, people are enjoying better qualities cars at lower prices. Dr M is indeed just fooling Malaysians. Dr M is making press releases almost everyday in the media and the internet.

It is better for him to stop talking and bluffing people because the more he talks the more excuses he makes for his past mistakes. Or he is just trying to protect he ass.