Proton faces squeeze from foreigners
Kuala Lumpur, July 3:
For Malaysia’s national car Proton, a 20-year honeymoon with consumers is turning into a seven-year itch. Once the king of the road, the ubiquitous Proton is facing increasing competition from foreign vehicles as Southeast Asia’s largest passenger car market gradually tears down tariff walls under a regional free trade pact. The tariffs had turned Proton — which started off by producing Mitsubishi clones in 1985 — a virtual monopoly. But today, consumers can choose from an auto smorgasbord including affordable Korean cars like Kia and Hyundai, Japanese Toyota and Honda, and luxury brands like BMW and Mercedes. The race will only become more intense and Proton’s future looks bleak unless it forms a strong partnership with a foreign maker to fix its biggest shortcoming — quality. “Malaysia’s auto market has evolved over the years,” said Sharath Somasundaram, an auto analyst with local brokerage MIDF-Sisma Securities, “Proton’s honeymoon has come to an end. If it wants to survive, it has to latch on to a foreign partner.” It has taken tentative steps in that direction by forming a technical alliance with Germany’s Volkswagen AG, which may take a stake in Proton.