Proton Says No to VW and GM, Will Go It Alone
By Brendan Moore
Proton Holdings, the Malaysian government-owned parent company of Proton, has announced that it is ending talks with Volkswagen over a cooperation agreement. Proton also ended similar talks with General Motors recently.
Partnership discussions in the past have included other auto makers such as PSA/Peuget-Citroen.
Proton stated that it would no longer seek a partner and was confident that its new models and domestic growth combined with overseas expansion would generate the profit it so desperately needs.
There are no auto industry analysts that agree with this scenario, however, and the consensus is that Proton needs a partner not only to save it from building negative market forces, but mostly from itself.
Proton has lost market share steadily ever since the Malaysian government removed protective tariffs that stymied other automakers efforts in Malaysia. Proton had over 52% market share in Malaysia just six years ago, but they are now down to 31% and could still drop more.
The Malaysian government has resisted bailing Proton out with new investment funding, and Proton has found it difficult to raise the money it needs for a new product portfolio, capital funding to enter new markets, technology and operational efficiencies.
This cash-poor situation has led to some curious actions from Proton recently, such as last week’s company press release that Proton had entered into an agreement to build an “Islamic” car, with funding to be supplied by Iran and Turkey. The car, according to Proton, “will incorporate features such as a compass to determine the direction of Mecca for prayers as well as compartments for storing the Koran and headscarves”.
Supporters of the plan to acquire a foreign partner are crestfallen as they see that now-discarded plan as the only practical solution to Proton’s many problems. The preferred outcome for the boosters of the cooperation scenario was that VW would have transformed Proton much like they did with Skoda, or that GM would have taken Proton and performed the same sort of magic they pulled off with Daewoo, bringing that company back from the dead.
2007 Proton Satria GTi
But that’s not going to happen, at least not any time soon. The Malaysian government may reconsider their stance at some point in the near future, but who can say?
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