Automaker Proton Will Not Get Bailout, Says Malaysia

For those of you that have been following the Proton saga, the latest is that the company is still looking for an investor/partner, the two leading candidates for this potential partnership are still GM and VW, and the current majority owner, the government of Malaysia, says no way to a government bailout.

Proton has sustained losses ever since Malaysia’s new-car market was opened up to outside competition, and the talks aimed at finding a partner have not gone well. The government’s official stance on the matter is almost nonchalant; they exude optimism that a partner for Proton will be found shortly. However, in their private discussions, it is believed that Proton’s ebbing fortunes and their cloudy future have the Malaysian government quite concerned. The government owns Proton through a state-investment firm named Khazanah Nasional Bhd.

Both GM and VW could use the manufacturing capacity and the market presence that Proton would give them in the part of the world Proton currently operates in, but so far the asking price has just been too high. It appears that both GM and VW are prepared to wait.

Proton, launched in 1985 under a previous government administration, has a large, very modern plant north of Kuala Lumpur that is currently under-utilized by approximately 60%. This plant would provide any new partner with instant low-cost production capacity in Southeast Asia, whose population is eager for car ownership, and is also, not incidentally, twice that of the United States at around 600 million people.

2006 Proton Savvy

Proton has a deserved reputation for making cars that are of mediocre quality, has models that are as old as 10 years old that have been virtually unchanged in those 10 years, has a poor service and parts network; and once the market was opened up, Malaysians voted with their wallets, snapping up Toyotas, Nissans and Kias. With their domestic market collapsing, and no real presence in any foreign markets, Proton is on shaky ground. If a sale doesn’t happen soon, there won’t be much value left in the company.

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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7 Comments

  1. A similar deal worked out great for GM when it had a chance to pick over the carcass of Daewoo a few years ago. I’m expecting a repeat of that, either from GM or VW.

  2. yeah, but does GM even need Proton when thet yhave Kia and Holden in the same area of the world? I guess it makes sense if the production costs are unbelievably cheap, but IMHO this is a better deal for Volkswagen.

  3. Please, please tell me the author of this post deliberately used the pun “Proton saga”! (grin) The Saga was Proton’s first car I think…

  4. Not intentional about the Proton Saga, but funny nontheless. I had mostly forgotten about the Saga, so I didn’t catch it. I only wish I was so clever…

  5. that Proton Savvy doesn’t look half-bad IMHO

  6. Yea situation of Proton bad in Malaysia for more money from people to support Proton is not like not. People angry with PM and angry of Proton but government does nothing care. Some Proton cars o.k. but some are not and no money from people for this.

  7. mr.uncomfortable, I’ve driven the Proton Savvy around in Malaysia, and it’s sort of okay. A lot of rattles, and it’s tinny.

    BTW, love your name.

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