Proton has started off 2023 with a strong surge in sales, having its best start to a year since 2013. With 11,681 units (including export sales) delivered in January, the increase in sales compared to the same month a year ago was 162.3%. With the market size for January estimated to be 51,000 units, Proton’s share would be 22.9%, an improvement of more than 12% compared to January 2022.
The strong performance is due to greater supply of vehicles from the two factories in contrast to the reduced output that the carmaker experienced last year due to flood-related supply issues. At the end of 2021 and early 2022, there was very severe flooding in some areas of Selangor which affected the operations of some of Proton’s suppliers.
Since the Zhejiang Geely Holding Group (Geely) acquired a 49.9% share in Proton in 2017, the Malaysian carmaker has been steadily regaining its strength in the domestic market. With new models like the X70 and X50, sales have kept rising although the COVID-19 pandemic slowed the trend last year.
Once the dominant brand in the market, Proton has been at No.2 for over 15 years and has been determined to regain its top position. With a strong sales month and more vehicles being available for delivery in September, the volume of 14,872 units (domestic + export) took the cumulative total volume for three quarters of 2022 to 102,353 units.
Having enough vehicles to deliver has been an ongoing problem for some time, due to the difficulty in completing vehicles as critical parts like microprocessors are in short supply globally. There is some progress in increasing output and at Proton, the effort has paid off with the carmaker able to deliver a record number of its X50 SUV in July.
And not only was it a new monthly sales volume record for the model but from their market intelligence, Proton also found that the 4,763 units of X50 delivered nationwide was the highest number for any model in the market. It’s been a long time since Proton could enjoy such an achievement and reflects the increasing output of vehicles from its factory in Tg. Malim, Perak.
Proton factory in Tg. Malim, Perak.
The record number of units also strengthens Proton’s position as the leader in the hotly contested SUV segment and is also the first time such a vehicle has led the overall market in volume.
The X50 accounted for 41.5% of the total Proton registrations for the month – 11,477 units (domestic + export). The cumulative volume for 7 months has reached 71,601 units, an increase of 19.7% over the same period in 2021.
Proton had a 22.7% market share in July, based on its estimation of the Total Industry Volume for the month being 50,500 units. Its cumulative volume from January to July would likely see its market share going up to 18.7%.
Proton X70
Besides the impressive performance of the X50 in July, the X70 also sees continued strong sales. With the updated model launched in early June, interest has grown and 1,704 units were registered in July. This allowed it to retain sales leadership for C-segment SUVs, contributing to Proton’s cumulative SUV volume in 2022 going past 31,500 units.
Strong performances by other models The rejuvenated Proton also continues to record strong numbers, with 4,521 units registered in July and bringing total volume for the year to 28,005 units. The figures also indicate the 2022 model, launched on May 12, achieved 9,811 registrations in just 80 days.
The Exora MPV also retained its long-standing leadership position with 476 units registered. However, due to approval delays in July, the Persona and Iriz numbers were not their usual high as registrations had to be temporarily suspended.
“Following a hectic June where automotive industry players scrambled to lock in bookings before the end of sales tax incentives, July was a month of consolidation where market demand fell to normal levels, and everybody concentrated on fulfilling orders already received. Proton was no exception and with our parts supply situation continuing to improve, we were finally able to show the true sales potential of the Proton X50,” said Roslan Abdullah, Deputy CEO of Proton.
“The company is immensely proud of the model becoming the first SUV to be crowned as the best-selling vehicle in Malaysia and we are thankful for the support from our customers. This achievement and Proton’s sales leadership in other segments shows our business plan is on the right track and repays the confidence placed in the brand by buyers, investors and other stakeholders,” he said.
“The easing of restrictions in global trade has been a major boost for Proton’s export division. With 5 months to go, we are on target for yet another year of double-digit percentage growth, though our enthusiasm is couched by economic issues faced in overseas markets,” said Encik Roslan Abdullah.
Proton Commerce Sdn Bhd Proton’s financing subsidiary, Proton Commerce Sdn Bhd, has announced it will honour all Letters of Understanding (LOU) at the stated interest rate even if they were issued prior to recent interest rate hikes. Terms and conditions apply, and funds must be disbursed by December 31, 2022, but it ensures customers who already have an LOU from Proton Commerce and are awaiting their orders do not have worry about being charged a higher rate for financing.
“We are working to ensure that despite recent interest rate hikes, our customers will still be able to afford the vehicles they ordered. It’s vital to ensure we convert as many bookings as possible into transacted sales as this will help drive registrations as we continue to strive for more future success,” said Encik Roslan Abdullah.
The momentum started in 2020, in spite of the pandemic situation, and put Proton in a strong position to accelerate into 2021. With an appealing range of offerings, cumulative sales in the first quarter of the year (Q1) were the highest since March 2012, with a large number of orders as well.
This has created a knock-on effect and for Proton Commerce, the carmaker’s finance arm, it could lead to a record number of loan disbursements. It has seen its loan volume grow in line with the increase in sales of Proton vehicles. For comparison, in 2018, it disbursed a total of 5,410 loans and this nearly doubled to 10,668 the following year. For 2020, despite disruptions caused by the coronavirus as well as loan moratoriums to ease the burden on distressed borrowers, Proton Commerce disbursed 14,189 loans.
In spite of the pandemic conditions in 2020, Proton saw high sales volumes which led to more loan applications to Proton Commerce, its financial arm.
All-time high for loan disbursements
This year, after just three months, the company is heading towards a record-breaking volume – an all-time high of 20,000 loans disbursed. “Although there was a downturn in many economic sectors caused by the COVID-19 pandemic, consumer sentiment for car purchases remains positive. Proton’s gains in product quality, its additions to the dealer network and the launch of new models have grown interest in its cars and we are seeing the results in the number of loan applications received,” said Mooi Fi Phang, CEO of Proton Commerce.
“Our loan disbursement volume for Q1 this year has increased by 42.3% and we are confident of our volume growing even more in Q2. However, the hire-purchase market could face a tough second half of the year as the PENJANA sales tax incentive is scheduled to expire at the end of June so the industry could see a period of correction as market demand finds its natural level,” he added.
New models like the X50 are drawing younger buyers, which sees a change in customer demographics for the brand.
Younger buyers drawn to Proton brand
Mr. Mooi revealed that Proton Commerce is also seeing a change in the demographics of its customers. “The age of Proton buyers is trending downwards, indicating the company’s revamped line-up has made it a more trendy choice with younger Malaysians. He also said 80% of Proton Commerce’s customers opt for 9-year hire-purchase financing plans, and that impaired loan rates up to three times lower than the industry average,” he said.
“2020 was a tough year for the industry as financial institutions had to make modification loss provisions for the 6-month moratorium programme announced by Bank Negara Malaysia. Thankfully for Proton Commerce, the financial stability of our customer base meant a very low number of our borrowers opted for the subsequent moratorium and with the removal of the provisions this year, we expect to contribute a healthy profit to our shareholders,” he added.
Having your own transport can certainly make life a lot easier – no need to get up earlier to catch public transport, more flexibility in daily movements and these days, less worry about crowded buses or coaches where there is a risk of getting infected with COVID-19. For graduates who are just starting to work, getting a loan to buy a car can sometimes be difficult as they don’t have a past record. Many loan applications require at least 3 months of prior employment and furthermore, they may also charge high interest rates initially.
Proton Commerce Sdn. Bhd. (PCSB), a unit of the Proton Group, understands this situation and has a campaign that provides fresh graduates with an opportunity to own their first car with low Hire-Purchase (H-P) loan rates. The campaign is on until December 31, 2020, coinciding with the sales tax holiday currently being offered for all Proton models.
Easier to qualify
This campaign only requires a letter of employment or a month’s salary slip in order to qualify for a loan. Starting at just 2.98% per annum, the rate offered by PCSB is currently one of the lowest in the segment. Basic requirements for a customer include being a graduate (minimum qualification diploma), be aged between 18-30 years, and have a job with a minimum salary of RM1,500.
“In today’s connected economy, mobility is important for young adults just entering the workforce. It provides a sense of empowerment and autonomy to these graduates. We are confident that this package will assist fresh graduates to own a car, as monthly repayments start from as low as RM239 per month,” said Mooi Fi Phang, Chief Executive Officer of PCSB.
Lower interest rates
According to Mr. Mooi, the H-P loan industry is projected to experience a surge in the near future, as a result of recent reduction in the reduction of the Overnight Policy Rate and the exemption of sales tax for passenger vehicles. Therefore, in addition to the Fresh Graduate Campaign package, PCSB reduced the overall offering interest rates to as low as 2.22% based on customer creditability and margin of finance. This means customers would directly benefit as their lower monthly repayment would enable them to use the savings on essentials, and conserve some funds for emergencies.
