Third National Car, The Unfinished Business – Why Mahathir Should Wake Up & Stop Hallucinating

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Mahathir’s fetish for national car projects is commendable, even applaudable, if today is 1983. Unfortunately, it’s been 35 years since “PROTON” was established in a mind-boggling venture – automobile design, manufacturing, distribution and sales. Subsequently, a second national car project – Perodua – was hatched in 1993, although solely in rebadging business.

Now, the defiant 93-year-old Prime Minister of Malaysia wants the 32-million Malaysians to blindly and obediently embrace his third national car project. Insanity is doing the same thing over and over again and expecting a different result. Of course, Mahathir isn’t crazy. But he has an unfinished business, ever since ex-premier Najib Razak sold off his pet project to China.

While his determination and perseverance is fantastic, Mahathir should spend some quality time at coffee shops and get some honest opinion why people can welcome him back as prime minister but not his obsession to build another car factory. To be fair, the first national car rolled out from its factory – Proton Saga – was quite a solid automobile. But that’s about it.

Even then, Proton was actually a manufacturer of rebadged Mitsubishi Motors(MMC) products in the 1980s and 1990s. It was only in the year 2000 that Proton produced its first indigenously designed car, even though the engine was still sourced from Mitsubishi. The Japanese automaker, of course, had only shared their obsolete engine technology with Proton.

The infamous “power window” problem had been stuck with Proton brand for years without a fix. Proton models were outdated thanks to complacency while the spare parts were sold at cut-throat price due to nepotism. Yes, millions, despite voted Mahathir as the prime minister for the second time, still remembers how majority of the master parts suppliers went to his relatives.

The dark age of Proton included horrible after-sales services. Loyal first time Proton buyers got a shock in their life when they were made to wait for hours just to be serviced. The arrogant service personnel behaved as if the customers owed them a living. And they had the cheek to charge extremely high cost for parts and labour. It was “take it or leave it” attitude during the glory period of Proton.

Proton’s domestic market share peaked to 74% in 1993, only to plunge like a rock to 15% last year, despite multiple restructuring plans in 2009 and 2012. Before is sold to Chinese automaker Geely in 2017, Proton sales dropped by 30% to 72,290 cars (2016) from 102,174 units (2015). Heck, they had even lost its market position to Honda.

For as long as one can remember, Proton was protected like an endangered species. Proton had sucked up a variety of government assistance including waived taxes – totalling up to RM13.9 billion since its inception in 1983. For 35 years, Malaysians were forced to pay for inferior Proton cars while subsidizing the automaker which could never seem to grow up due to protectionist policy.

And now, Mahathir wants to repeat the same mistake. Yesterday (July 30), he said his administration is reviewing the National Automotive Policy (last updated in 2014), which may include imposing conditions on the import of foreign vehicles. He said while the government agrees with the practise of free trade, other countries worldwide impose conditions for their own markets.

PM Mahathir’s remark suggests that the new government is seriously looking into the old policy of protectionism in order to boost Proton car sales and re-capture the market share it has since lost. But Proton has been sold to the Chinese, has it not? Was there a secret deal with Beijing to protect the Chinese investment in exchange for a better deal in the ECRL project?

Obviously, Mahathir Mohamad tried to argue like President Donald Trump. But such argument doesn’t hold water to begin with. Trump was slapping tariffs on practically everyone due to U.S. trade deficit, as a result of unfair trade practices. Proton, meanwhile, is trying to force its unfair protectionist practices on others because very few want a piece of the junk.

For once, regardless of race, the Malays, Chinese and Indians can enjoy affordable foreign-brand cars such as Toyota Vios, Honda City and Nissan Almera. They were equipped with C-segment features at B-segment price. Even Perodua enjoys brisk business because they leave the heavy lifting – designing and engineering – to Japanese partner Toyota and Daihatsu.

From the beginning, Mahathir’s Proton pet project was defective. The country did not have the market large enough to sustain the capital-intensive and highly competitive industry. That was why Mahathir shocked everyone in the 1980s when he urged the then 20 million populations to breed like a rabbit – revealing his policy of 70 million populations so that Malaysia will be a self-sustaining market.

Mahathir’s latest plan to limit the access of foreign cars to the local market is absolutely a regressive move for the growth of the country’s automotive industry, not to mention the unfairness to Malaysians. He should think about a level playing field for local and foreign carmakers, and not selfishly thinking about spoon-feeding the 35-year-old Proton again.

Unlike Proton, Thailand automotive industry has become the largest in Southeast Asia and the 12th largest in the world. Established over 50 years ago, Thailand’s automotive sector accounts for nearly 12% of Thailand’s GDP and employs more than 500,000 people, and producing 2-million vehicles every year. Thailand succeeded because they have wisely chosen liberalization, not protectionist policy.

Some argue that Mahathir should be allowed to play with his toy as long as the third national car project is run and funded by private investors. That will not work simply because based on past history, most often than not the private investors are cronies who would always run back to the government for bailout or various financial assistance or tax incentives.

Mahathir argued that the previous government’s policy which favoured foreign cars had made it difficult for Proton to make a profit. Clearly, it was an admission that Proton cars suck big time. Had Proton adopted meritocracy instead of racist policy, it would have attracted top brains and great designer in developing quality and sexy automobiles for overseas export.

In spite of its small population of 10 million, Sweden’s automobile manufacturer Volvo (sold to Chinese Geely Holding Group in 2010) produced top quality cars, buses and trucks desired by foreign buyers. At the end of the day, Proton does not need the pathetic protection if its cars are sellable. Only a crappy car manufacturer would cry and whine to be accorded special privileges.

Adding insult to the injury, Proton, despite owning Lotus, had failed to leverage on the British technology and engineering to add value and “differentiate” Proton cars from its competitors. Volvo prides themselves on their safety innovations – the safest car in the world. What is the selling point of Proton? Mahathir should not bad-mouth about inferior foreign cars when Proton itself is junk.

Obviously, the Proton management, engineering and R&D department have been sitting on their hands for decades until Chinese automaker Geely acquired 49.9% stake and started kicking butts. Early this year, as the new manager pushes for Proton distributors to upgrade from a 1S (sales only) centre to an integrated 3S (sales, service and spare parts) centre, it was the Malays who went berserk.

Pekema president Zainuddin Abdul Rahman claimed that most of the 3S centres were run by non-bumiputera (mostly local ethnic-Chinese) and 1S centres by bumiputera (ethnic-Malay). Therefore, Mr. Zainuddin accused Geely Chinese of trying to kill off ethnic-Malay simply because the persons in charge of Proton’s development and sales are (mainland) Chinese.

Does Mahathir plan to re-introduce not only the protectionist policy but also breed discrimination and racism – Malays need unfair preferential treatment – when the third national car project kicks off? Get real, if Proton could not even compete fairly and survive during the combustion-engine era, chances are they would have little chance in the electric or hybrids technology.

Nope, Mahathir can forget about a new venture into manufacturing electric cars from the scratch. It would be less risky and more productive to just assemble Chinese Geely electric cars locally, and rebadged it as third national car (*grin*), if that could stop the old man from crying and bitching on his blog. Stop torturing people with another wet dream. Stop hallucinating!!