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Proton and VW – try and try again

POSTED BY Vishal Bhaskaran ON 16 June 2015

By: Yamin Vong

Proton’s announcement yesterday of its new relationship with Suzuki capped two weeks of intense speculation. But even more recent internal documents in Proton show the national car company acknowledging VW’s human resources, if not yet technical intellectual property.

Let’s start with the Proton-Suzuki collaboration as announced yesterday by its non-executive chairman, Tun Dr Mahathir Mohamad.

Datuk Aishah Ahmad, president of the Malaysian Automotive Association (MAA), was happy for Proton.

“A successful Proton is good for the nation. A car manufacturer creates jobs,” she said.

Others were more critical, even cynical.

“Yes, they need to partner with a technology owner but why not a similarly-sized Japan car maker with more technology and a broader product range such as Mazda. Suzuki doesn’t have a broad range of products.

“It is good only for small cars,” said an unimpressed CEO, who of course didn’t want to be named.

Yet another automotive industry participant said that Proton needed more R&D grants for new models and that the relevant government agency in charge had insisted on changes in acquiring technology before funding applications could be processed.

“Yes, the Ministry was happy that Proton had reached a new relationship with a technology partner.

“I guess both brands need each other. Both of them are suffering a sales drop-off. Last week alone, a handful of Suzuki dealerships were surrendered because of unprofitability.

“Next year, we can expect to see a consolidation of Suzuki dealerships and more re-badging and platform sharing,” said an automotive industry consultant.

Where does Volkswagen (VW) figure in all this?

zeno kerschbaumer

Dr Zeno Kerschbaumer

Last week, there was an internal memo in the DRB-Group.

The memo announced the appointment of Dr Zeno Kerschbaumer to take over the Head of Commercial position vacated when Datuk Hisham Othman was promoted.

That means two former VW Malaysia MD’s are now in Proton. The first to be hired was Andreas Prinz whom we met at the preview of the Proton Iriz and Kerschbaumer is the MD preceding the current MD, Armin Keller.

As one of the automotive journalists participating at the preview and first media drive of the first Proton cars in Malaysia almost 30 years ago, I must say that Proton is in its current dismal position because the policy makers 20 years ago didn’t react to the opening of China.

China’s capitalism with communism turned the global automotive industry on its head and the Malaysian government of the time didn’t anticipate the challenge.

Of course, as journalists and the advantage of hindsight, we can give the correct answers now.

All investors in the Malaysian automotive industry should be helped tin the creation of  an automotive technology-rich environment.

Tax privileges and grants should be distributed to all the investors and the quantums should reflect the benefits that they bring to the nation: so long as the investor meets the criteria of being a local assembler and creating value.

If the policy makers had realised that infant industry status protection can’t be forever Proton would have been forced to merge 10 years ago and who know, if this had happened, Malaysia would now be exporting half of the vehicles it manufactured.

And having said that, all of us should realise that the global automotive industry is a very competitive playing field and that tariff and non-tariff barriers relatively do more harm than good to those who choose to protect themselves.

This is an industry where it would be a dream to get visionary managers the likes of Carlos Ghosn of the Renault-Nissan Alliance or Sergio Marchionne the Fiat Chrysler Alliance boss.

Lets hope this new alliance brings about the positive change that Proton, and more importantly the country, have been waiting for.

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