Two months remain for this year and Proton’s total sales volume for 2022 has passed the full year’s sales volume of 2021. Announcing its October numbers today, the Malaysian carmaker said after 10 months of sales, its cumulative volume has reached 115,362 units. In the same period in 2021, it was only 114,708 units, or a difference of 33.6%.
The 10-month sales volume, which was contributed by the addition of 13,013 units (including exported vehicles) in October, was also noteworthy as it was the company’s highest volume since 2014.
With steady progress towards resolving issues delaying production of new vehicles, Proton recorded its best sales month of 2022 with 14,787 units (domestic + export) registered in June. This volume represented a 51.0% growth over the previous month, taking total sales for the first half the year past 60,000 units. The 60,124 units delivered were an increase of 3.9% over the same period in 2021.
Overall, Proton retains its second position in new vehicle sales in Malaysia and estimates its market share to be 22.6%. The cumulative market share for the year is 18.2%, a decrease of 5.1% compared to the first 6 months of last year. This is based on an expected Total Industry Volume (TIV) of 331,164 units (the Malaysian Automotive Association will announce confirmed data later in the month).
Proton X50 achieves best sales month
Launched in October 2020, the X50 SUV has been remained a strong seller for Proton. It has helped catapult the brand to the position of best-selling SUV brand in the country. June saw the X50 recording its best sales month with 4,473 units delivered nationwide. This volume was clearly ahead of other B-segment SUVs as well as in the overall SUV market.
The X50’s bigger brother, the X70, also saw strong sales, especially with the updated model. It achieved its best performance in 20 months with 2,696 units. This volume, according to Proton, puts it at the top of the C-segment SUV list.
Another model enjoying the benefits of a recent refresh is the Saga, with the 2022 model introduced on May 12. In June, 5,460 units were delivered, which Proton says puts it back to the top of the A-segment sedan class. During the first 6 months of 2022, the model’s cumulative total has reached 23,484 units.
The evergreen Exora MPV has kept its leadership in the C-segment MPV class and in June, the company delivered 513 units. As for the Persona and Iriz, these two trusty models recorded deliveries of 1,224 units and 421 units, respectively.
Over 150,000 bookings in 6 months
“June was a busy month for the automotive industry with most brands trying to produce as many cars as possible to satisfy market demand. The announcement that sales tax exemption would be removed from July 1 also created a surge in bookings as customers rushed to take advantage of the savings offered. Proton has received more than 150,000 bookings for the first 6 months of the year and when added to carry-over orders from 2021, we will need to work hard to deliver cars as quickly as possible to eager customers,” said Roslan Abdullah, Deputy CEO of Proton.
“Thankfully, the gradual resolution to our parts shortage issues has not only boosted production but also had a positive effect on the aftersales network. As promised, all our 3S/4S outlets now have 3 months stock of fast-moving parts and this is replicated at our parts warehouse. Supply issues for other parts are also being resolved so we are hopeful of delivering a higher level of aftersales service to our customers soon,” he added.
Top exporter
Proton was the first company to export vehicles from Malaysia and today, it is also the top vehicle exporter. While its domestic sales continue to grow, the growth in export sales has also been significant. For the first half of 2022, the total number of vehicles exported was 2,722 units, an increase of 81.2% over the previous year.
The Saga has accounted for 59% of the total volume exported but the X70 and X50 are also growing in demand at a faster pace. As in the domestic market, June also saw both model posting their best-ever export numbers and Proton expects even better numbers in coming months.
Pakistan continues to be the biggest export market, taking 1,770 units for the first half of 2022, a growth of 183% compared to the first half of 2021. This was followed by Brunei and Bangladesh with 203 and 194 units, respectively. Local assembly in some countries is helping Proton’s distributors to price the models competitively in their markets.
“Proton’s exports are one of the pillars to drive our future growth and also in line with our promise to the government to help develop Malaysia’s automotive export industry. With the addition of new markets such as South Africa to our portfolio, we target for export volumes to continue on their current growth trajectory and form an even larger portion of our sales in the future,” Encik Roslan Abdullah said.
Demand is high but Proton, like most other carmakers, cannot complete its new vehicles at the factory because crucial components are in short supply. These are the microchips which are in the many electronic systems that modern cars have; just one item not available and the vehicle cannot be completed. This situation has been ongoing since last year and has limited the number of vehicles Proton can deliver, resulting in customers having to wait longer.
The chart below shows the effects of the shortage as each month this year has seen less deliveries than the same month in 2021. By right, the numbers should be accelerating as there is strong demand but Proton can only report what it delivers, not what is in its order bank.
The carmaker reported 8,829 units (including exports) for the month of April, a decrease of 32.2% compared to the month before and 41.1% less than what was reported in April 2021. This volume is estimated to be a 15.6% share of the Total Industry Volume (TIV) in April and cumulatively for the first four months of 2022, the market share should be around 17%.
Long waiting list
Commenting on the situation, Roslan Abdullah, CEO of Proton Edar, said: “After two years of pandemic-affected sales, Malaysia’s automotive market continues to show strong growth potential in 2022, as evidenced by the long waiting list for new car deliveries. Proton is also trying to catch up to market demand, but we also must acknowledge being the most affected by chip supply issues.”
“Thankfully for our customers, we have secured our supply of chips for May and June and are projecting a quick turnaround in the coming months. The situation is still uncertain for the rest of the year and the global car industry is under pressure from rising costs, but the company is working on countermeasures against these issues to ensure our customers get the best products and value in Malaysia and abroad,” he explained.
Saga remains bestseller
The Saga continued to be the bestselling Proton in April and no doubt will get a boost in demand when the updated model is launched later this month. The two SUVs – the X50 and X70 – also remain very popular with 1,554 units and 1,530 units delivered, respectively. The evergreen Exora is still tops in the MPV C-segment with its unbeatable value-for-money.
The supply situation also affects exports and in April, 456 units were sent overseas. These brought the total export volume for 2022 to 1,573 units, which is 109.7% higher than for the same period in 2021. At present, Pakistan is the biggest export market for Proton, having taken 1.050 units, followed by Egypt (172 units) and Brunei (138 units).
Up till 2001, Proton had entered many markets around the world, with over 210,000 cars exported to 51 countries. However, after that, the number fell and although recognizing that exports were vital as its protection in the home market diminished and competition increased, Proton did not have a strong export business.
The number of exported vehicles dwindled to only 248 units in 2017 but over the past few years, the Malaysian carmaker has been slowly rebuilding its presence overseas and even having models assembled in some countries. Volumes are seeing a gradual upturn and last year, 3,018 Proton vehicles were exported, more than double the number in 2020. For 2022, the International Sales Department is targeting to grow export sales exponentially to 10,000 units.
As it has a bigger focus on righthand-drive models, it has obviously given more attention to countries where motorists drive on the left side, like us. The latest new market is South Africa, although it is not unfamiliar to Proton as the brand had a presence there up till 2012. It will return with the X50 and X70 this September, followed by the latest Saga.
It will be represented by the CMH (Combined Motor Holdings) Group, an investment holding company which has been active in the motor business since 1987. Proton joins a long list of global brands that CMH represents, some of which are Ford, Chery, Honda, Toyota, Suzuki, Mahindra, Peugeot and Citroen.
SUVs to grow export sales
Proton’s growth will be achieved not only by entering more new markets but also increasing local assembly (CKD) operations overseas. Currently, the carmaker has CKD operations in Pakistan, Kenya and Bangladesh with Sri Lanka set to begin in the second half of 2022. The company currently exports cars to 13 overseas markets, with South Africa becoming the fourteenth one.
As a percentage of Malaysia’s overall vehicle exports, Proton’s numbers are becoming increasingly prominent. From 12.8% of total exports in 2019, the number grew to 30.2% in 2020 and hit 60.9% in 2021. That put the brand at the No.1 position, an achievement in spite of the global pandemic.
Proton SUVs help brand image
Proton’s improved model range has helped in export sales, especially as it has the two SUVs jointly developed with Geely. The SUV segment is the most active globally and the sales success enjoyed in Malaysia by the X50 and X70 has been largely replicated in other markets. This helps to establish the brand, paving the way for more models to be exported.
“Our new model range offers advanced features that are on par with many competitors from other brands. In many of our markets, the Proton X50 and Proton X70 sit near the top of their class in terms of specifications yet are sold at prices equivalent to or less than their direct rivals. This helps to draw in the upper echelon of local car-buyers and helps build brand equity in these markets, making it easier for our other products to then be accepted in the future,” said Steven Xu, Director of International Sales.
“PROTON’s long-term goals require exports to play a major role to grow the company’s overall sales as the annual Total Industry Volume in Malaysia is expected to remain flat. So, we are exploiting the strength of our new products, our brand and even the links Malaysia has with other countries to establish a foothold in many new markets. This is then bolstered by establishing CKD operations where possible, which also helps to grow local economies,” he added.
The COVID-19 pandemic affected business activity all over the world, impacting sales and delaying projects. But now that the situation is easing, many activities are quickly resuming and some projects that may have been suspended can now proceed. One of them is the local assembly of Protons in Pakistan at the factory which was under construction since March 2019. Recently, the first units of the Saga began to come off the production lines, setting a new milestone for Proton.
The Saga is the first Proton model to be assembled by Al-Haj Automotive, the exclusive distributor of Proton models in Pakistan, at their new greenfield factory in Karachi. The plant, built with an initial investment of US$20 million (about RM83.1 million), will create 2,000 direct employment opportunities in its first three years of operations. It is estimated that a further 20,000 indirect jobs will also be created as a result of the new plant being established.
25,000 units a year
The initial capacity of 25,000 units a year is expected to meet the potential sales volume of the market which was about 128,000 units in 2020 but higher at around 193,000 units the year before the pandemic affected the country. As with the case in Malaysia, local assembly means that the retail prices can be lower due to more favourable taxation, a critical element in Proton’s aim to grow exports in the future.
Speaking during the roll-out ceremony, Hilal Khan Alfridi, Chief Executive Officer of Al-Haj Automotive said: “The successful assembly of the Proton Saga in Pakistan is the culmination of the hard-work and untiring efforts of Proton, the entire Al-Haj team, its suppliers and vendors. Even with COVID-19 restrictions in place, we continued to push to build our new assembly plant and as such, we are confident it will set new industry standards and enable us to introduce more products that meet the international quality levels set by Proton.”
X70 assembly to follow
The X70 SUV is to be second model assembled in Pakistan. Launched in December 2020 as an imported CBU model, the X70 met with positive response. Together with the final batch, the total number exported to Pakistan is 602 units. The first locally-assembled units are expected to be available by the end of this year.
The President of Pakistan viewing one of the first locally-assembled Proton cars.
“Despite COVID-19 severely affecting our project timelines in Pakistan, demand for Proton models in the country remains high for both the Proton Saga and Proton X70 attracting a strong following. Al-Haj has received 2,500 orders for the Saga and over 2,000 orders have been placed for the X70, so we wish to thank the customers for their belief in our products and especially their patience and understanding over the delays in receiving their cars,” said Roslan Abdullah, CEO of Proton Edar.
“Now that the final shipment is on the way and local assembly has started for the Saga with the X70 to roll off the production line before the end of the year, we can finally work to catch up to market demand. This will allow Al-Haj Automotive and Proton to establish a strong market presence in the country to benefit future sales growth,” he added.
Final shipment of Proton X70s from Malaysia to Pakistan.
Sharing assembly expertise
With export sales being one of the pillars to achieving its long-term goals, Proton’s commitment to the Pakistan market extends beyond the shipment of CKD packs and consumable parts. It also includes human resources and there are currently 20 Proton staff specialising in various manufacturing related fields stationed in Karachi to assist in assembly operations.
“After 37 years of vehicle assembly experience, Proton has accumulated a wealth of in-house expertise that can be shared with our overseas partner. Having operated in various market conditions, we can quickly adapt to different scenarios, so we hope to be able to play a major role in ensuring the success of the brand in Pakistan,” Encik Roslan said.
2021 for the auto industry started low but as the first quarter progressed, sales volumes rose. However, with the second quarter, it appears that the market is going into a downturn. By Proton’s estimate, the May Total Industry Volume (TIV) of new vehicles registered fell by around 20%. While the Movement Control Order (MCO) may have had some effect, but shortages of chips – vital components for the many electronic systems in modern cars – have been slowing down output from the assembly plants.
For Proton, after seeing strengthening sales with each month, it reports that its May volume was down 37.1% from April. The Malaysian carmaker sold 9,440 units (some of which were exported) and with this volume, its estimated market share would be 20.3%.
Up to the end of May, the cumulative volume reached 57,283 units which translates to a market share estimated at 23.5% and an increase of 2.4% over the same period in the previous year.
As with the previous month, the X50 and X70 continued to lead their segments by a considerable margin. 1,899 units of the smaller SUV model were delivered in May while the X70 had 1,523 new owners. This brings the cumulative total of 3,422 units for the domestic as well as export markets.
Exports reach new 98-month high
Meanwhile, Proton’s overseas sales continue to gain momentum despite international markets going through varying degrees of lockdown. With 669 units comprising the Saga, X50 and X70 exported in May, the company’s international sales division recorded its best month since March 2013. As a result, total export sales for 2021 are now less than 100 units behind the total for the whole of last year.
“Car sales in Malaysia dipped in May due to factors such as chip shortages and the implementation of MCO in the middle of the month. Despite most industry players having healthy order books, most brands struggled to meet demand. For Proton, the numbers were high enough to retain second overall in the sales table and we also received a welcome boost from our export division who set a 98-month high despite restrictions on international shipping,” said Roslan Abdullah, CEO of Proton Edar.
Focusing on the future
With the full lockdown in effect (tentatively until June 14), all Proton sales outlets have to be closed. However, its authorised service centres are allowed to operate. Proton owners are requested to make a prior appointment before going to the service centre (which should be within 10 kms of their home address).
The company will also be considering utilising the enforced break to retool its sales plan for the remainder of 2021. It aims to future-proof its business against regulatory changes and external factors such as the coronavirus.
“2020 proved to the world that business as usual can be disrupted without warning. To remain competitive in an unpredictable environment, Proton, along with its vendors and dealers, need to have the flexibility to pivot quickly to take advantage of unexpected opportunities. As such, we will intensify our efforts to implement a framework to meet upcoming regulations locally and internationally which is vital for future growth,” Encik Roslan said.
“We are also finalising our model launch plans for the rest of this year. The current MCO will push some of these dates back, but Proton remains committed to meeting our launch targets and creating some excitement for our customers in 2021,” he added.
Proton’s quest to become more export-oriented continues with the addition of another international market for the Proton Saga which is Pakistan. The latest model of the brand’s bestseller made its debut in Pakistan earlier this month, the eighth overseas market where it is offered besides Brunei, Bangladesh, Egypt, Jordan, Kenya, Mauritius and Nepal.
The Proton Saga line-up for Pakistan consists of three versions -, the Saga with manual transmission, Saga with automatic transmission and a better equipped Saga Ace AT.
Additionally, 100 units of the Saga R3 Limited Edition will also be available, and customers can have it with a manual or automatic transmission.
As in Malaysia, the launch of the Saga in Pakistan was done online due to the present COVID-19 pandemic making large gatherings unsuitable.
Present at the launch was the High Commissioner of Malaysia to Pakistan, Ikram Mohammad Ibrahim. Encik Ikram said that he hoped Proton’s operations in the country will further strengthen economic ties with Malaysia.
Following the launch of the X70 in December last year, the Saga is the second model to be offered in Pakistan. Currently, all Proton models are imported from Malaysia in completely built-up (CBU) form but the company’s partner, Al-Haj Automotive, is preparing for local assembly operations at its new plant in Karachi by the third quarter of 2021.
With a planned capacity of 25,000 units per annum, the plant will enable sales of Proton cars to grow quickly in the market which Proton sees as having much growth potential. “I am thankful to our fellow Pakistanis for making the Proton Saga an instant success in Pakistan. This car will definitely stand out for its reliability, durability and value for money,” said Hilal Khan Afridi, CEO of Al-Haj Automotive, who is confident that Pakistani customers will be attracted to the Proton brand and its products.
100 units of the Saga R3 Limited Edition will be sold in Pakistan.
As the second quarter of 2021 starts off, Proton is looking to increase its international market presence to achieve its long-term goals. Besides the Saga – the volume seller in most markets – the X70 and X50 are also being exported.
“Exports are an important pillar for PROTON and will account for an increasing percentage of our sales volume in coming years. Aside from promoting the features of our products, we also leverage on the high quality reputation of Malaysia’s manufacturing sector, which lends credibility to our own product story. In 2021, aside from exploring new opportunities, we will also ramp-up efforts to re-enter major ASEAN markets such as Thailand and Indonesia,” said Roslan Abdullah, CEO of Proton Edar.
Exports are vital for the business of any carmaker if it is to keep growing. Unless it is the gigantic market in China, every carmaker cannot rely on its domestic market alone for long unless it receives protection and preferential treatment by the government.
For Proton, which did receive such protection for a long time, its focus on the domestic market enabled it to grow without the heavy cost of competing in other markets where it was just another brand. However, with the increasing liberalisation, Proton’s share of the Malaysian market began to erode and although it did export its vehicles, its overseas business was not significant.
While sales leadership in the domestic market will always be a main priority, the company recognises that in order to grow for the future, it needs to expand its customer base and search for sales in other countries. The export market is therefore of great importance to Proton’s long-term goal to be the third best-selling automotive brand in ASEAN by 2027.
Doubling export sales in 2021
The carmaker is therefore giving much more attention to its export business and has set itself the challenging target of doubling export sales in 2021 compared to what was achieved in 2020. It is setting this target on the assumption that export activities are not overly hampered by restrictions due to the global pandemic.
“Over the last two years, Proton’s international sales division has been aggressively pursuing export sales in numerous markets. We have deployed multiple strategies to achieve our goals, from shipping CBU vehicles built in Malaysia to inking agreements with local conglomerates to assemble CKD cars to benefit from local tax incentives,” said Steven Xu, the company’s Director of International Sales.
“We targeted to see significant gains in 2020 but those plans were affected by COVID-19. Still, we managed to grow our export volume, enter new markets such as Kenya and even launch the Proton X50 in Brunei barely 2 months after its Malaysian debut, so there are many positives to take into the new calendar year,” he said.
Spearheading the export activities will be Proton’s most popular model, the Saga. The X70 and X50 SUVS will also be gradually introduced to more overseas markets. At the same time, setting up local assembly operations in some foreign markets will also boost exports.
Tailoring products to local needs
One of the keys to growing exports is having products that not only appeal to a number of different markets but more importantly, meet the needs of the market. Global players take this seriously and many years ago, Honda developed a 1599 cc engine for its Accord model just for the Singapore market when virtually all other markets used a 1602 cc engine.
Likewise, Proton has fitted a 1299 cc engine to the Saga it exports to Pakistan, instead of the 1332 cc unit commonly used, because customers there prefer cars with smaller engines. The same model is also sold in Nepal and comes with a heater, a vital component for markets with cold winter months but not installed in models sold in the ASEAN region.
“The Proton Saga remains a popular model in many countries due to its hardiness, practicality and value-for-money proposition but in order to lift our brand image, it is important for our newer models such as the Proton X70 and Proton X50 to also be exported. This will show car buyers what the company is capable of and help pave the way for us to sell other models in the future to fill up the range,” added Mr. Xu.
While Proton’s distributors and importers in its export markets are owned by local entities, it works closely with them to ensure there is a cohesive market introduction, promotion and product launch plan to suit local market conditions. By building a consistent brand image, the company is taking steps towards being a global entity and paving the way towards penetration in other regions in the future.
Working closely with foreign partners
“By working closely with our foreign partners, we aim to present a consistent message in all our export markets and ultimately, this will make it easier for the Proton brand name to establish itself in even more countries. This is in line with our aim to promote Malaysia and its vendors on a regional and global level and ultimately, this will raise their competitiveness and benefit the economy as a whole,” said the CEO of Proton Edar, Roslan Abdullah, who is not only responsible for Proton’s sales volume but also for the marketing and promotion of the brand.
“Our products have not been available in many parts of the world for a variety of reasons. Our new range of updated and jointly developed products with Geely presents an opportunity to change the narrative by opening up ownership to more countries and we are optimistic they will find a ready market in many countries,” he added.
History of Proton exports
In the early years of Proton’s existence, its focus was on the domestic market which took virtually every car it made. Export markets, though established, were not given great attention and even Mitsubishi Motors, its partner, suggested that it concentrate on developing its skills in making cars and about the business before embarking on overseas sales.
Nevertheless, Proton began exporting just one year after the first Saga went on sale in Malaysia. Its early targets were those which were ex-British colonies, like Malaysia, and where traffic went on the left side of the road like us. This would make it unnecessary to develop a lefthand drive variant so soon.
A Proton advertisement in the UK in the 1990s.
The UK market was considered a market with great potential then, and it was hoped that the Malaysian origins of the Saga would appeal to the British who had lived in Malaysia in the pre-Merdeka period. The first model was introduced at the Birmingham Motorshow in 1988 and initially, Proton received some preferential taxation as it was a small volume brand entering the market. This allowed it to sell at attractive prices and it was well received. The growth in sales in the UK led to a subsidiary being established to handle import and marketing activities, and that market was at one stage, Proton’s biggest export market.
As the only Muslim country in the world to develop its own car and have an automotive brand, Protons from Malaysia were expected to be popular in other Muslim countries. In fact, the first export market was Bangladesh where the Saga first went on sale in 1986. Egypt has also been a strong market for Proton since it entered in 2004.
By 2001, Proton had a presence in over 50 countries, some in significant numbers and some just a handful. It had tried to enter the US market in the late 1980s, appointing a business partner called Global Motors which created a unit known as ‘Proton America’ to get the necessary approvals. Two units of the Saga modified to lefthand drive and with 1.8-litre engines were sent to a motorshow in Las Vegas in 1988. The plan was to export as many as 30,000 cars to the USA for sale within a year. However, things didn’t work out as expected and no further attempts were made to enter the biggest car market in the world at that time.
Bangladesh is Proton’s oldest export market, the brand having entered in 1986.
Like many manufacturers, Proton also considered local assembly in some markets and it did so for a while in the Philippines and had a project going for Iran. It also had a joint venture company with Mitsubishi Motors in Vietnam and the deal was that for models above 1600 cc, Mitsubishi’s models would be used, and Proton would provide models below 1600 cc. But things didn’t proceed as planned and Proton never got to assemble any model.
From 2001 onwards, Proton had a new range of models and hoped to grow its exports, especially as the domestic market would become more challenging as it was supposed to be ‘opening up’ with the realisation of the ASEAN Free Trade Area (AFTA). It even built a new factory in Tanjung Malim, Perak, with a capacity of up to 500,000 units in anticipation of an export offensive regionally.
However, for various reasons, export activities diminished and in Europe, as the emission and safety regulations got tougher, Proton’s aging platforms and engines became unacceptable. By 2010, even the ‘father of Proton’, Tun Mahathir Mohamed, acknowledged that perhaps Proton had not given sufficient thought to the need to make its cars suitable for global markets and only focussed on the domestic market because it was big enough. Dealerships in many of the 50 markets slowly stopped selling Proton which was not so helpful at a time when the company was also facing a decline in domestic sales.
Proton at the Bangkok International Motor Show in 2011. The carmaker is aiming to become No.3 in the ASEAN region by 2027.
“We are exploring all opportunities to grow export volumes for Proton,” said Dr Li Chunrong, CEO of Proton. “We are also leveraging on Geely’s extensive overseas network operations to increase the cost-effectiveness of Proton’s operations. Geely can support us in these initiatives and there is a lot of experience within the Group so we hope to leverage on it to enable us to sell more cars outside of Malaysia.”
After a year of unprecedented challenges, Proton closed 2020 on a high with another increase in sales, following a previous landmark performance in 2019. Despite losing over 2 months of vehicle production as well as sales due to the MCO (Movement Control Order), the company was still able to sell 109,716 vehicles for the whole of 2020 after a final month of 13,306 units.
The 2020 volume represented an increase of 8.8% over the 100,821 units sold in 2019, and Proton says it is the only major automotive company to record growth in Malaysia. Its market share for the year also increased to an estimated 21.1%, a significant 4.4% increase.
Main drivers of volume growth
The main drivers of volume growth were the extensively updated Persona, Iriz, Exora and Saga, which all posted higher numbers in 2020. The X50 surpassed expectations despite its later than planned arrival. The sales performance, combined with a 49.8% increase in export volume, allowed Proton to buck the trend of the Malaysian automotive industry which is expected to contract by an estimated 13%.
In terms of individual performance, each Proton model ended the year near the top of their respective segments. The Saga remains as the company’s bestseller for 2020, while the launch of the X50 and continued strong sales for the X70 combined to make Proton the leading SUV brand in the country.
Sales of X50 and continued high demand for X70 makes Proton to leading SUV brand in Malaysia.
“We are grateful to have achieved this level of performance against the backdrop of 2020. To describe it as challenging would be an understatement but we persevered. Our results were backed by many factors, trust from our customers, support from the government, commitment from vendors, resilience of our dealers and also the diligence of our staff,” said Dr. Li Chunrong, CEO of Proton.
Strategic management and decision-making
COVID-19 brought economic activity to a complete halt and its adverse effects required quick, prudent and tough management decisions. Fortunately, with the last few years of vigilant cost control and improved efficiencies, the company was able to react quickly to the crisis. This meant that despite the shutdown, there were no layoffs or salary cuts. More importantly, constant monitoring and agility allowed the company to ramp up production very quickly after the lockdown.
Post-lockdown, Proton was rigorous about safety for both customers and employees. Stringent protocols were deployed and are still being followed to ensure that all customers, partners and employees can interact with peace of mind.
Still, like all other industries dependent on a global supply chain for components, the company was affected by the availability of parts for producing new cars and replenishing its spares. This caused delays that, in some instances, severely increased waiting times for both sales and service customers. However, steps have been taken to address these issues and a marked improvement in the coming year is promised though, in the short term, some delays will persist.
Continued push in manufacturing and quality
A key component in Proton’s performance for 2020 was the results of its investments in manufacturing and quality. This was both in the areas of hardware and software. Aside from technology, new processes and systems were introduced to drive an increase in capacity and precision. This was exemplified not only with the increased volume but with the smooth introduction of the X50 at the company’s new production line at the Tanjung Malim factory in Perak, which also makes the Persona, Iris and X70.
Proton also reports that it markedly improved its Global Customer Product Audit (GCPA) score demonstrating that its quality initiatives are coming to fruition. The company was able to do this despite manufacturing being the most severely impacted by the pandemic.
Export growth in trying times
Despite the restrictions placed on the global movement of goods, 2020 saw a strong year for the company’s export division, with a bumper month in December. The first locally assembled Saga roll-off the assembly line in Kenya and the model also made its debut alongside the X70 in Pakistan. Both models are currently imported in CBU form from Malaysia but will soon be assembled in Karachi when the new assembly plant is completed later this year.
The X50 meanwhile entered its first export market when it made its international debut in Brunei last month. It is the fourth Proton model to be launched in the kingdom in 2020 after the latest Persona, Iriz and Saga.
Raising the retail game
Proton increased its footprint nationwide with another 20 3S/4S outlets, bringing its network size to 140 by the end of 2020. The company continued its programme of upgrading to make a difference in the entire customer value-chain. In striving to deliver a premium brand experience, it paid special focus to revamping the back-end of the business, especially in the areas of after-sales and parts.
While already showing results, these efforts are part of Proton’s plan for the long-term evolution of its business. As such, 2020 also saw Proton change from a retail sales model to a wholesale one with the transfer of ownership of 49 of its branches. This allows the company to focus more on product development, product quality, after sales service and exports while opening the door for dealers to expand the envelope of customer service.
Proton also did its part in helping in the war against COVID-19, providing frontliners with protective equipment made at Proton’s factory, and also vehicles for government agencies to use.
“2020 was a real test of Proton’s mettle as we had only just begun our new trajectory. The nature of this pandemic for an organization like ours, which depends on global supply chains, put great strain on the business. However, a combination of good strategy and hard work has left us not only with an increase in sales against a decreasing market but a renewed belief in our product strategy, quality and commitment to our customers,” Dr.Li said.
“At the same time, we also saw to it that we did our part for the country, which all of us at Proton are especially proud of. We will continue to put the pedal to the metal in 2021 and strive to improve all aspects of the business,” he added,
While Proton has continued to buck the local industry trend with steady growth in 2020, its export activities have also seen some momentum upwards. This is in spite of the extremely challenging conditions brought on by the COVID-19 pandemic that have impacted the auto industry. The carmaker’s exports have grown 10.6% so far this year and it is looking forward to selling even more vehicles outside Malaysia in 2021.
An unprecedented launch schedule has been planned with as many as 5 market introductions to take place in the coming weeks. One of these events will be the export market debut of the Proton X50 in Brunei, and another two will see the start of local assembly and sales of Proton vehicles in Kenya.
Proton began exports of CKD packs to Kenya in August this year and the first cars will roll out of the assembly plant this month. Brunei will be the first overseas market to start selling the X50 SUV (below).
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“While local market leadership is one of our targets, it is equally vital for the Proton brand to build up its presence internationally, representing both the company and Malaysia. This was part of the 10-year plan that was devised at the beginning of our strategic partnership with Geely,” said Dato’ Sri Syed Faisal Albar, Chairman of Proton Holdings Berhad.
“However, parts of the export plans were affected by the COVID-19 pandemic as each country had different responses and restrictions. Still, thanks to our diligent work and the strong support of various government agencies, we are finally getting back on track,” he added.
Introduction of Exora and Saga in Egypt at the end of 2018.
Additionally, Proton importers in Bangladesh and Egypt will also be hosting virtual product launches for the latest Saga before 2020 ends. This will be followed by a similar launch in Nepal just as the year draws to a close.
History of Proton exports
In the early years of Proton’s existence, its focus was on the domestic market which took virtually every car it made. Export markets, though established, were not given great attention and even Mitsubishi Motors, its partner, suggested that it concentrate on developing its skills in making cars and about the business before embarking on overseas sales.
Nevertheless, Proton began exporting just one year after the first Saga went on sale in Malaysia. Its early targets were those which were ex-British colonies, like Malaysia, and where traffic went on the left side of the road like us. This would make it unnecessary to develop a lefthand drive variant so soon.
Proton Wiras have also been spotted in North Korea though there is no official mention of exports to North or South Korea, so they may have been brought in by a private importer.
A Proton advertisement for the UK market in 1994 (left) and a display at the Sydney Motorshow in Australia in 2012.
The UK market was considered a market with great potential then, and it was hoped that the Malaysian origins of the Saga would appeal to the British who had lived in Malaysia in the pre-Merdeka period. The first model was introduced at the Birmingham Motorshow in 1988 and initially, Proton received some preferential taxation as it was a small volume brand entering the market. This allowed it to sell at attractive prices and it was well received. The growth in sales in the UK led to a subsidiary being established to handle import and marketing activities, and that market was at one stage, Proton’s biggest export market.
As the only Muslim country in the world to develop its own car and have an automotive brand, Protons from Malaysia were expected to be popular in other Muslim countries. In fact, the first export market was Bangladesh where the Saga first went on sale in 1986. Egypt has also been a strong market for Proton since it entered in 2004.
Chile was one of the early markets that Proton entered but stopped for 20 years before returning in 2016.
By 2001, Proton had appeared in over 50 countries around the world, some in significant numbers and some just a handful. It had tried to enter the US market in the late 1980s, appointing a business partner called Global Motors which created a unit known as ‘Proton America’ to get the necessary approvals. Two units of the Saga modified to lefthand drive and with 1.8-litre engines were sent to a motorshow in Las Vegas in 1988 in what was meant to be a prelude to exporting the first batch of 30,000 cars to the USA for sale. However, things didn’t work out as expected and no further attempts were made to enter the biggest car market in the world at that time.
Like many manufacturers, Proton also considered local assembly in some markets and it did so for a while in the Philippines and had a project going for Iran. It also had a joint venture company with Mitsubishi Motors in Vietnam and the deal was that for models above 1600 cc, Mitsubishi’s models would be used, and Proton would provide models below 1600 cc. But things didn’t proceed as planned and Proton never got to assemble any model.
Proton’s distributor in Turkey, Ulu Motor, has been selling the Exora, Preve, Saga FLX and Persona.
From 2001 onwards, Proton had a new range of models and hoped to grow its exports, especially as the domestic market was supposed to be ‘opening up’ and competition would become more challenging. It even built a new factory in Tanjung Malim, Perak, with a capacity of up to 500,000 units in anticipation of an export offensive regionally.
However, for various reasons, export activities diminished and in Europe, as the emission and safety regulations got tougher, Proton’s aging platforms and engines became unacceptable. By 2010, even the ‘father of Proton’, Tun Mahathir Mohamed, acknowledged that perhaps Proton had not given sufficient thought to the need to make its cars suitable for global markets and only focussed on the domestic market because it was big enough. Dealerships in many of the 50 markets slowly stopped selling Proton which was not so helpful at a time when the company was also facing a decline in domestic sales.
The low export volumes since 1986 – around 406,000 units in total – are obviously not acceptable and exports are vital if the carmaker is to grow further. While being a significant global player would be too ambitious and unrealistic, the aim is to become No. 3 in ASEAN besides becoming No. 1 in Malaysia in due course.
“We are exploring all opportunities to grow export volumes for Proton,” said Dr Li Chunrong, CEO of Proton. “We are also leveraging on Geely’s extensive overseas network operations to increase the cost-effectiveness of Proton’s operations. Geely can support us in these initiatives and there is a lot of experience within the Group so we hope to leverage on it to enable us to sell more cars outside of Malaysia.”
