Malaysia’s Proton Looks to Grow Output, Rebuild Share

DRB-Hicom has enlisted foreign automakers to help boost sales of its wholly owned Proton subsidiary, but the Malaysian conglomerate recognizes change must come from within, as well.

Chairman Mohamad Murtaza says in DRB-Hicom’s annual report that volume dictates success in the auto industry, and efforts to raise annual Proton production to 500,000 units over the next five years are key.

“We aim to be the leader again in the local market through ensuring the quality of our products and offering new models in all segments of the market,” he says.

The report says DRB-Hicom’s other automotive businesses are performing creditably, thanks to partnerships and collaborations with Japanese and European automakers including Audi, Honda, Isuzu, Mercedes, Mitsubishi, Suzuki and Volkswagen.

One example is the conglomerate’s successful joint venture with Volkswagen, which initially was intended to assemble 3,000-5,000 units a year at the automotive complex in Pekan, but this has been boosted to 40,000.

“Our collaboration with Volkswagen AG is enabling us to realize the potential of the complex with the production of, first, the Passat, followed by the Polo and Jetta soon after,” Murtaza says. “We will also be working to meet the increasing demand for Audi cars, which has a huge order book for the A6 Hybrid already in hand.”

Proton light vehicles accounted for 23% of the Malaysian industry’s 610,650 sales in calendar 2012, according to WardsAuto data. But market share has been eroding because Proton is suffering from a perception problem, DRB-Hicom Group Managing Director Khamil Jamil says in the annual report.

“Its cars have lost their appeal, causing Proton cars to lose its No.1 position in the industry as its market share fell from 60%,” he says. “While Proton used to have decent models in the Wira, Waja and Perdana, it did not come out with replacement models.”

It is critical that the automaker introduce “exciting” models in all market segments, Jamil says.

“Our challenge is to regain market share and make Proton the No.1 choice again in Malaysia, with a production target of more than 500,000 cars per annum to be achieved in the next five years.”

The automaker intends to build 40,000 units annually for export to the ASEAN trade bloc by 2015. Proton at one time exported cars to more than 50 countries, and Jamil says new opportunities beyond the borders of a saturated Malaysian market lie overseas.

“We need to focus on specific markets that offer sizeable, high-growth potential, such as ASEAN, Australia, the United Kingdom and China, capitalizing on our product advantages and technical capabilities,” he says.