PROTON Car Company (1983—Present)

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History:— Proton was founded on May 1983 as the "Perusahaan Otomobil Nasional" (otherwise known as "PROTON"). Approximately 70% of the company was state owned, more specifically by the "Heavy Industries Corporation of Malaysia" with 30% sold to the "Mitsubishi Motor Corporation" and "Mitsubishi Corporation".[1] The three companies invested a total of £140 million pounds into the car making plant, situated near Kuala Lumpur.[1] It covered 78,000 square meters on a 546,000 square meter property.[1] Proton's early start in the 1980s did not bode well.[1] This wasn't the fault of the company, but more precisely caused by a slump in car sale demands for the first type of car Proton wanted to produce; saloon-types.[1] Throughout the 1980s there were 100,000 sales per year for these cars, but by 1985 this dramatically fell to 71,300.[1] The factory itself was built to create 80,000 vehicles per year alone.[1] In order to be profitable, the factory needed to produce more than 67,000 cars annually.[1] In 1986, the factory was only churning out between 30,000—40,000 cars per year.[1] The Malaysians recognised this problem, and made plans to sell them in Bangladesh, Brunei, Hong Kong, Pakistan and Sri Lanka.[1] However most of these markets, would remain un-exploited. South Korea by contrast, who's industry was similarly very young, was already planning on selling 100,000 of theirs at a cost of $5,000 dollars in the US alone.[1] These were up to US standards (Malaysia's, at the time, were not).[1]

A picture of Proton's on-site production facility, in 1986 ("New Scientist").
The PLUS highway (1990s), Malaysia to Singapore.
However, saying, this, Malaysia did undergo something of a revolution after Proton was formulated in the 1980s, with it's main impact largely being felt in the 1990s.[2] Initially Japanese companies had invested some money, technology and other forms of automobile assistance, which was later gradually handed back over to the native Malays.[2] In the 1990s, the company began churning out tens of thousands of engines every month, additionally helped by government tariffs protecting the car industry from foreign imports, as well as financial subsidies given to the company in order to hold it up.[2] Coincidentally the government was also investing heavily in new infrastructure across the country, the chief concern here being road projects.[2] The "PLUS" project for instance ("project lebuhraya utara selatan") was the very first, which cut travel time to the important economic hub and city-state of Singapore from seven hours to four.[2] With these projects, Malaysia's automobile revolution was in full effect.[2] Car production rose from 50,000 in 1987 to 500,000 in 1993.[3] Prior to this event, barely one in ten Malaysians owned a car, but by 2012 this had increased to one in four.[2] Thus, Proton actively empowered the nation, becoming something more than just a mere status symbol.[2] It's importance cannot be under-emphasised as it inspired the creation of other car manufacturers such as "Perodua"; an organic outcome of the companies lasting cultural and economic impact.[2] Proton's existence was a collective project by the state to compete with the first world, as well as to modernise itself.[4]
All of this was in stark contrast to the company having suffered immense losses between 1985 and 1988, mainly owed to a reduced domestic demand caused by the recession.[5] This was further caused by higher product prices, which were themselves caused in large part because of the appreciation of the Japanese yen.[5] However, by 1989, Proton's income amounted to a healthy RM820 million ringgits; with pre-tax profits amounting to RM32.6 million ringgits.[5] In 1993, management of the company went back to the Malays.[6] By 1994, Proton captured 73% of the domestic market.[5] This was driven in large part from the rapid recovery of the economy, starting from 1987.[5] Such was the recovery that there was a 70% increase in production between 1987 and 1993.[5] On the other hand, other historians claims that the losses Proton had suffered before weren't entirely bad times for the company (even though Proton was losing $15,000 dollars per year per vehicle in 1986).[5][4] In the same year, the company began exporting it's first set of export models to Bangladesh.[5] From hereon it grew to export 21,000 vehicles altogether, making up 23% of it's sales.[5] The UK also eventually became one of it's most major foreign currency markets for the cars,[n. 1][n. 2] aside from the 28 countries that Proton managed to export their cars to.[5] However, one of the most pertinent issues today surrounding Proton is the use of foreign imported vehicle parts, which make the cars far more expensive than the company would like.[6]
Kuala Lumpur looking very bare in the 1990s.

c. 2000—c. Present

Proton brought-in approx. $10 billion dollars worth of trade to Malaysia, with profits amounting to $538 million dollars (2003—2007).

Income:— Proton made $2.48 billion dollars in sales in 2003 (with profits amounting to $301 million dollars), followed by 2004; $1.72 billion dollars (with profits amounting to $139 million dollars), 2005; $2.3 billion dollars (with profits amounting to $220 million dollars), 2006; $1.4 billion dollars (with losses amounting to $177 million dollars), and 2007; $1.69 billion dollars (with profits amounting to $55 million dollars).[7] In terms of actual car sales, this overall trend has shown a decline of some 155,000 cars to 120,000 for the same year range; and for 2006 to 2011, actually increasing from 120,000 to 155,000.[8] Between 2011 to 2016, this fell from 155,000 to some 40,000 up to June 2016.[8] Percentage-wise from 2001 to 2006, unit sales were overall declining, with it's domestic share declining from 50% to some 24%, which can be explained by the appearance of Proton's competitor, Perodua, which has seen it's domestic share increase dramatically.[8] Between 2006 and 2011 however, Proton managed to recover some of it's losses increasing it's share to some 29% from 24%.[8] Thereafter in 2011 to 2016, Proton saw another decline in market share, this time from approximately 29% to approximately 14%.[8] In total up to 2015, Proton has produced for it's lifetime more than 4 million cars.[9] Perhaps what is shocking however, is that Proton has never exploited importing cars to Indonesia, which has a population of more than 300 million, with 1 million cars sold per year (with a potential of up to 4 million annualy).[10]

However, according to other sources, Proton's sales are somewhat different. This other sources lays out the following data, claiming that it is from Proton's Annual Reports. This source is Kamarulzaman Darus (February 9th, 2012). Proton Performance Over the Years. Slideshare. Retrieved November 16th, 2016.

Partnerships:— Proton has never been shy to confront it's partners over their behaviour, and has even cut off ties when it has felt it no benefit to the relationship (as it should). Mitsubishi for instance,[n. 3] which owned 15.86% of the company in 1983, sold it's stake back in 2004[n. 4] over a disagreement.[12] Khazanah Intnl thereafter bought over 42.7% of Proton.[12] Analysts have suspected that the failure of the partnership was down to the fact that the Japanese were refusing to transfer technologies over to Malaysia.[12] The government has also been helpful to the company in regards to this; the economic union, ASEAN, to which Malaysia belongs,[13] instituted a policy of abolishing tariffs on imports, which would have benefited Thailand at the expense of Malaysia.[12] However the government delayed imposing these tariffs for three years, bringing them in only in 2008.[12] Furthermore, interest shown by Volkswagen in the mid-2000s, almost saw the two companies merge into an agreement over a strategic partnership, with Proton set to acquire newer technologies and technical assistance.[12] However it was later revealed that the Europeans had actually wanted to overtake 51%[14] of the company for themselves.[12][n. 5] By November 2007, Proton severed it's ties with the company.[12] At this time, Proton could afford it.[12] It's sales were up, and it's exports were looking very healthy.[12] In 2006 for instance 14,706 cars were exported globally, rising to 21,261 by 2009.[12] By 2010 however, this declined to 18,769, caused by the global recession.[12]

Proton protects itself aggressively from foreign companies.[15] Pictured are Proton engineers.

Car Sales

Proton has designed and created the Saga I (1985), Persona (1993), Wira Saloon (1993), Satria Neo (2006), Perdana (1994), Waja (2000), Gen-2 (2003), Satria Neo (2006), Exora (2008), Preve (2012), Suprima S (2013) and the Iriz (2014).

  1. According to the following source, Proton's sales by car are shown below (however they somewhat differ from the sources discussed above). This source lays out the following data, claiming that it is from Proton's Annual Reports. This source is Kamarulzaman Darus (February 9th, 2012). Proton Performance Over the Years. Slideshare. Retrieved November 16th, 2016.

A picture of Proton's on-site production facility, in 1986 ("New Scientist").

History:— Proton was founded on May 1983 as the "Perusahaan Otomobil Nasional" (otherwise known as "PROTON"). Approximately 70% of the company was state owned, more specifically by the "Heavy Industries Corporation of Malaysia" with 30% sold to the "Mitsubishi Motor Corporation" and "Mitsubishi Corporation".[1] The three companies invested a total of £140 million pounds into the car making plant, situated near Kuala Lumpur.[1] It covered 78,000 square meters on a 546,000 square meter property.[1] Proton's early start in the 1980s did not bode well.[1] This wasn't the fault of the company, but more precisely caused by a slump in car sale demands for the first type of car Proton wanted to produce; saloon-types.[1] Throughout the 1980s there were 100,000 sales per year for these cars, but by 1985 this dramatically fell to 71,300.[1] The factory itself was built to create 80,000 vehicles per year alone.[1] In order to be profitable, the factory needed to produce more than 67,000 cars annually.[1] In 1986, the factory was only churning out between 30,000—40,000 cars per year.[1] The Malaysians recognised this problem, and made plans to sell them in Bangladesh, Brunei, Hong Kong, Pakistan and Sri Lanka.[1] However most of these markets, would remain un-exploited. South Korea by contrast, who's industry was similarly very young, was already planning on selling 100,000 of theirs at a cost of $5,000 dollars in the US alone.[1] These were up to US standards (Malaysia's, at the time, were not).[1]

The PLUS highway (1990s), Malaysia to Singapore.
However, saying, this, Malaysia did undergo something of a revolution after Proton was formulated in the 1980s, with it's main impact largely being felt in the 1990s.[2] Initially Japanese companies had invested some money, technology and other forms of automobile assistance, which was later gradually handed back over to the native Malays.[2] In the 1990s, the company began churning out tens of thousands of engines every month, additionally helped by government tariffs protecting the car industry from foreign imports, as well as financial subsidies given to the company in order to hold it up.[2] Coincidentally the government was also investing heavily in new infrastructure across the country, the chief concern here being road projects.[2] The "PLUS" project for instance ("project lebuhraya utara selatan") was the very first, which cut travel time to the important economic hub and city-state of Singapore from seven hours to four.[2] With these projects, Malaysia's automobile revolution was in full effect.[2] Car production rose from 50,000 in 1987 to 500,000 in 1993.[3] Prior to this event, barely one in ten Malaysians owned a car, but by 2012 this had increased to one in four.[2] Thus, Proton actively empowered the nation, becoming something more than just a mere status symbol.[2] It's importance cannot be under-emphasised as it inspired the creation of other car manufacturers such as "Perodua"; an organic outcome of the companies lasting cultural and economic impact.[2] Proton's existence was a collective project by the state to compete with the first world, as well as to modernise itself.[4]
Kuala Lumpur looking very bare in the 1990s.
All of this was in stark contrast to the company having suffered immense losses between 1985 and 1988, mainly owed to a reduced domestic demand caused by the recession.[5] This was further caused by higher product prices, which were themselves caused in large part because of the appreciation of the Japanese yen.[5] However, by 1989, Proton's income amounted to a healthy RM820 million ringgits; with pre-tax profits amounting to RM32.6 million ringgits.[5] In 1993, management of the company went back to the Malays.[6] By 1994, Proton captured 73% of the domestic market.[5] This was driven in large part from the rapid recovery of the economy, starting from 1987.[5] Such was the recovery that there was a 70% increase in production between 1987 and 1993.[5] On the other hand, other historians claims that the losses Proton had suffered before weren't entirely bad times for the company (even though Proton was losing $15,000 dollars per year per vehicle in 1986).[5][4] In the same year, the company began exporting it's first set of export models to Bangladesh.[5] From hereon it grew to export 21,000 vehicles altogether, making up 23% of it's sales.[5] The UK also eventually became one of it's most major foreign currency markets for the cars,[n. 6][n. 7] aside from the 28 countries that Proton managed to export their cars to.[5] However, one of the most pertinent issues today surrounding Proton is the use of foreign imported vehicle parts, which make the cars far more expensive than the company would like.[6]

c. 2000—c. Present

Proton brought-in approx. $10 billion dollars worth of trade to Malaysia, with profits amounting to $538 million dollars (2003—2007).

Income:— Proton made $2.48 billion dollars in sales in 2003 (with profits amounting to $301 million dollars), followed by 2004; $1.72 billion dollars (with profits amounting to $139 million dollars), 2005; $2.3 billion dollars (with profits amounting to $220 million dollars), 2006; $1.4 billion dollars (with losses amounting to $177 million dollars), and 2007; $1.69 billion dollars (with profits amounting to $55 million dollars).[7] In terms of actual car sales, this overall trend has shown a decline of some 155,000 cars to 120,000 for the same year range; and for 2006 to 2011, actually increasing from 120,000 to 155,000.[8] Between 2011 to 2016, this fell from 155,000 to some 40,000 up to June 2016.[8] Percentage-wise from 2001 to 2006, unit sales were overall declining, with it's domestic share declining from 50% to some 24%, which can be explained by the appearance of Proton's competitor, Perodua, which has seen it's domestic share increase dramatically.[8] Between 2006 and 2011 however, Proton managed to recover some of it's losses increasing it's share to some 29% from 24%.[8] Thereafter in 2011 to 2016, Proton saw another decline in market share, this time from approximately 29% to approximately 14%.[8] In total up to 2015, Proton has produced for it's lifetime more than 4 million cars.[9] Perhaps what is shocking however, is that Proton has never exploited importing cars to Indonesia, which has a population of more than 300 million, with 1 million cars sold per year (with a potential of up to 4 million annualy).[10]

However, according to other sources, Proton's sales are somewhat different. This other sources lays out the following data, claiming that it is from Proton's Annual Reports. This source is Kamarulzaman Darus (February 9th, 2012). Proton Performance Over the Years. Slideshare. Retrieved November 16th, 2016.

Proton protects itself aggressively from foreign companies.[15] Pictured are Proton engineers.

Partnerships:— Proton has never been shy to confront it's partners over their behaviour, and has even cut off ties when it has felt it no benefit to the relationship (as it should). Mitsubishi for instance,[n. 8] which owned 15.86% of the company in 1983, sold it's stake back in 2004[n. 9] over a disagreement.[12] Khazanah Intnl thereafter bought over 42.7% of Proton.[12] Analysts have suspected that the failure of the partnership was down to the fact that the Japanese were refusing to transfer technologies over to Malaysia.[12] The government has also been helpful to the company in regards to this; the economic union, ASEAN, to which Malaysia belongs,[13] instituted a policy of abolishing tariffs on imports, which would have benefited Thailand at the expense of Malaysia.[12] However the government delayed imposing these tariffs for three years, bringing them in only in 2008.[12] Furthermore, interest shown by Volkswagen in the mid-2000s, almost saw the two companies merge into an agreement over a strategic partnership, with Proton set to acquire newer technologies and technical assistance.[12] However it was later revealed that the Europeans had actually wanted to overtake 51%[14] of the company for themselves.[12][n. 10] By November 2007, Proton severed it's ties with the company.[12] At this time, Proton could afford it.[12] It's sales were up, and it's exports were looking very healthy.[12] In 2006 for instance 14,706 cars were exported globally, rising to 21,261 by 2009.[12] By 2010 however, this declined to 18,769, caused by the global recession.[12]

Car Sales

Proton has designed and created the Saga I (1985), Persona (1993), Wira Saloon (1993), Satria Neo (2006), Perdana (1994), Waja (2000), Gen-2 (2003), Satria Neo (2006), Exora (2008), Preve (2012), Suprima S (2013) and the Iriz (2014).

  1. According to the following source, Proton's sales by car are shown below (however they somewhat differ from the sources discussed above). This source lays out the following data, claiming that it is from Proton's Annual Reports. This source is Kamarulzaman Darus (February 9th, 2012). Proton Performance Over the Years. Slideshare. Retrieved November 16th, 2016.

Sources

Footnotes

  1. ^ In it's first year it sold 10,300 cars to the UK.
    Quote: "It captured two-thirds of the domestic auto market despite a four-month waiting list. In Britain, it sold 10,300 units in its first year, far above expectations."
    1. Gurmeet Kaur (April 9th, 2016). Proton’s bumpy journey. The Star. Retrieved November 7th, 2016.
  2. ^ However, by 2016, Proton's sales to the UK amounted to a paltry 11 cars sold.
    1. Ben Miller (January 7th, 2016). UK 2015 car sales analysis: winners and losers. Car Magazine. Retrieved November 7th, 2016.
  3. ^ The former deputy Prime Minister of Malaysia, Mahathir, is considered as the architect of Proton Holdings. He physically went to Japan himself in order to negotiate partnering with Mitsubishi back in 1981.
    1. Linda Low (2004). Developmental States: Relevancy, Redundancy Or Reconfiguration?. Nova Publishers. p. 197. ISBN 978-1-59454-143-8.
  4. ^ However, according to some other sources, the company retained it's stake in Proton until 2008, owning 7.9% of the company.
    1. Kenneth E. Hendrickson III (25 November 2014). The Encyclopedia of the Industrial Revolution in World History. Rowman & Littlefield Publishers. p. 638. ISBN 978-0-8108-8888-3.
  5. ^ The company employs an estimated 90,000 people, most of them being contractors, and so Malaysia itself could not afford to lose such an important employer.
    1. Chris Rowley; Malcolm Warner (13 September 2013). Management in South-East Asia: Business Culture, Enterprises and Human Resources. Routledge. p. 2. ISBN 978-1-134-73404-7.
  6. ^ In it's first year it sold 10,300 cars to the UK.
    Quote: "It captured two-thirds of the domestic auto market despite a four-month waiting list. In Britain, it sold 10,300 units in its first year, far above expectations."
    1. Gurmeet Kaur (April 9th, 2016). Proton’s bumpy journey. The Star. Retrieved November 7th, 2016.
  7. ^ However, by 2016, Proton's sales to the UK amounted to a paltry 11 cars sold.
    1. Ben Miller (January 7th, 2016). UK 2015 car sales analysis: winners and losers. Car Magazine. Retrieved November 7th, 2016.
  8. ^ The former deputy Prime Minister of Malaysia, Mahathir, is considered as the architect of Proton Holdings. He physically went to Japan himself in order to negotiate partnering with Mitsubishi back in 1981.
    1. Linda Low (2004). Developmental States: Relevancy, Redundancy Or Reconfiguration?. Nova Publishers. p. 197. ISBN 978-1-59454-143-8.
  9. ^ However, according to some other sources, the company retained it's stake in Proton until 2008, owning 7.9% of the company.
    1. Kenneth E. Hendrickson III (25 November 2014). The Encyclopedia of the Industrial Revolution in World History. Rowman & Littlefield Publishers. p. 638. ISBN 978-0-8108-8888-3.
  10. ^ The company employs an estimated 90,000 people, most of them being contractors, and so Malaysia itself could not afford to lose such an important employer.
    1. Chris Rowley; Malcolm Warner (13 September 2013). Management in South-East Asia: Business Culture, Enterprises and Human Resources. Routledge. p. 2. ISBN 978-1-134-73404-7.

References

  1. ^ a b c d e f g h i j k l m n o p q r s t u v w x Reed Business Information (24 July 1986). New Scientist. Reed Business Information. p. 36. ISSN 02624079
  2. ^ a b c d e f g h i j k l m n o p q r Sudhir Thomas Vadaketh (1 September 2012). Floating on a Malayan Breeze: Travels in Malaysia and Singapore. Hong Kong University Press. p. 128. ISBN 978-988-8139-31-6.
  3. ^ a b A. Kuchiki; M. Tsuji (19 November 2009). From Agglomeration to Innovation: Upgrading Industrial Clusters in Emerging Economies. Palgrave Macmillan UK. p. 25. ISBN 978-0-230-25101-4.
  4. ^ a b c d Mantle Jonathan (13 December 2013). Car Wars: Fifty Years of Backstabbing, Infighting, And Industrial Espionage in the Global Market. Arcade Publishing. pp. 168–. ISBN 978-1-61145-955-5.
  5. ^ a b c d e f g h i j k l m n o p q r s t Greg Felker; K. S. Jomo; Rajah Rasiah (2013-02-01). Technology Development in Malaysia: Industry and Firm Studies. Routledge. p. 279. ISBN 978-1-134-64201-4.
  6. ^ a b c d USA International Business Publications (7 February 2007). Malaysia Business and Investment Opportunities Yearbook. Int'l Business Publications. p. 143. ISBN 978-1-4330-3152-6.
  7. ^ a b Jack W. Plunkett (2008). Plunkett's Automobile Industry Almanac 2009: The Only Comprehensive Guide to Automotive Companies and Trends. Plunkett Research, Ltd. p. 451. ISBN 978-1-59392-122-4.
  8. ^ a b c d e f g h i j CK Tan (October 10th, 2016). Fast action needed to save Malaysia’s ‘national carmaker’. Financial Times. Retrieved October 13th, 2016.
  9. ^ a b Jagdev Singh Sidhu, Thomas Huang (4 July 2015). Proton’s fight for survival. The Star. Retrieved November 7th, 2016.
  10. ^ a b Associated Press (6 February 2015). Malaysia's Proton to aid Indonesia with national car project. Daily Mail. Retrieved November 7th, 2016.
  11. ^ a b c d Kamarulzaman Darus (February 9th, 2012). Proton Performance Over the Years. Slideshare. Retrieved November 16th, 2016.
  12. ^ a b c d e f g h i j k l m n o p q r s t u v w x Leslie R. Rudnick (4 February 2013). Synthetics, Mineral Oils, and Bio-Based Lubricants: Chemistry and Technology, Second Edition. CRC Press. p. 836. ISBN 978-1-4398-5538-6.
  13. ^ a b ASSOCIATION OF SOUTHEAST ASIAN NATIONS (ASEAN). May 2016. Nuclear Threat Initiative. Retrieved November 12th, 2016.
  14. ^ a b Wong Chun Wai (30 April 2016). In the hot seats to turn Proton around. The Star (Malaysia). Retrieved November 12th, 2016.
  15. ^ a b Tim Andrews; Bryan J. Baldwin; Nartnalin Chompusri (2 September 2003). The Changing Face of Multinationals in South East Asia. Routledge. p. 49. ISBN 978-1-134-50817-4.

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