Proton Posts Fifth Consecutive Quarterly Loss

It just keeps getting uglier

By Brendan Moore

08.28.2007

2006 Proton Satria GTi (basically a Mitsubishi clone)

Proton Holdings, the state-controlled automaker in Malaysia, announced earlier today that it had a net loss of 48.8 million ringgit ($13.4 million USD) for the quarter ending June 30, compared to a loss of 58.7 ringgit during the same period last year. Sales fell 19% from the same period last year to 1.14 billion ringgit.

Proton seems to be in a death spiral, with sales marching downward as sales of imported vehicles climb steadily upward. The Malaysian government announced plans last year to seek a foreign partner for Proton, but that effort has proceeded in fits and starts, with the government asking what is believed to be too high a price for a company with a rapidly depreciating value. The two foreign suitors, GM and VW, have been sitting on the sidelines, waiting for the price to get more reasonable as Proton’s market share and sales volume decreases, and their losses continue to mount. Government officials are publicly sanguine about Proton’s difficulties; although they have promised that they will not pour more taxpayer money into Proton (You can read Automaker Proton Will Not Get Bailout, Says Malaysia from Autosavant in May 2007 for more background on this).

Proton attributed their recent quarterly loss to intense competition among automakers in Malaysia, as well as the recent increased difficulty in the consumer credit markets, which has pinched off auto lending. The company claims their new forthcoming models combined with their efforts at cost-cutting would allow them to finish the calendar year out in a strong fashion. It is generally agreed among business analysts in the region that this scenario is unlikely, and that Proton will probably suffer losses until a strong foreign partner can be found. Proton’s vehicles are not faring well in the market against the newly-allowed Japanese competition, and new models are are expected to provide only a momentary respite from Proton’s sales declines.

2008 Proton Persona – developed in-house by Proton

Both GM and VW would very much like to have the local production capacity any deal with Proton would bring; but neither one is going to over-pay for the privilege of being Proton’s partner in the region.

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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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4 Comments

  1. Are Malaysian cars built safer than Chinese cars? If they are, then let’s get those ovr here instead of the Chinese deathmobiles. Maybe Chrysler get buy a controlling interest in Proton and get their small cars from there instead of China.

  2. That GTi doesn’t look too bad. Which Mitsubishi is under the metal?

  3. I’d love to see VW pick up Proton at a fire sale price.

  4. You should link this back to your story on Proton today (Nov 1). I can’t believe they told VW and GM to take a hike. They’re going to regret that later, I can guarantee it.

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