Analysts say no to PM Mahathir's idea for new Malaysian car company

Analysts are lukewarm towards Malaysia's Prime Minister Mahathir Mohamad's plan on creating a new national car company and are voicing out technical and demand concerns.
Analysts are lukewarm towards Malaysia's Prime Minister Mahathir Mohamad's plan on creating a new national car company and are voicing out technical and demand concerns.PHOTO: AFP

KUALA LUMPUR - Malaysia's Prime Minister Mahathir Mohamad's plan to set up a new national car company after China's Geely took a stake in his 1980s brainchild Proton has not been well-received by industry insiders.

Tun Dr Mahathir told a conference in Tokyo on Monday (June 11) - his first international audience since his Pakatan Harapan coalition's surprise win in last month's general election - that he had "ambitions to start another national car".

His remarks, which come as his new administration vows to cut the country's RM1 trillion (S$335 billion) national debt, sparked criticism from those who remember Proton's financial struggles despite receiving billions in subsidies.

"The government needs to solve its financial woes first. A new car company requires high start-up cost," said an automotive analyst at Hong Leong Bank. "It's an idea. But whether or not this can be implemented is another issue."

Another automotive analyst with a local bank said: "A genuine plan to set up another automaker would be disastrous for us - we just don't have the technical expertise or a market that has a big enough demand."

Dr Mahathir on Monday floated the idea of a new national car that can access the global market, and be built in collaboration with Asian partners like Thailand, Japan, China and South Korea.

But analysts see little incentive for these Asian countries, which already have automotive name brands and access to the Malaysian market, to partner a new automaker.

 
 
 
 

"Of the four countries mentioned, three have their own successful homebred autos. It's difficult to see how Malaysia can contribute to that," said an automotive analyst.

The 92-year-old premier has brought up the idea of a replacement for Proton before, after the previous administration of Najib Razak oversaw the sale of a 49.9 per cent stake in Proton to China's Geely in May 2017.

Once the country's pride, Proton has over the years suffered losses and incurred huge debts as other automakers gained traction in the domestic market, eroding its substantial market share.

The Geely deal was meant to revive its fortunes, although Dr Mahathir decried its sale then, saying "My child is lost".

His idea for what observers have dubbed "Proton 2.0" has not sat well with Malaysians, including politicians from both sides.

"When public transportation projects such as MRT3 is cancelled, the announcement of a new national carmaker project is a regressive and backward step," said Umno lawmaker Khairy Jamaluddin.

"Not only is the national carmaker project environmentally unfriendly with carbon dioxide emissions, but it's bound to eat up a large chunk of government expenditure that should be channelled to developing public transportation projects," he added.

Members of Dr Mahathir's coalition also oppose the idea, urging investment in better public transport instead.

"We should invest more in public transportation, not private vehicles," said economist Azrul Azwar Ahmad Tajudin on Facebook. Mr Azrul is a member of Parti Keadilan Rakyat.

Meanwhile, Muhammad Shakir Ameer, exco member of Democratic Action Party's youth wing, posted on social media that there should instead be a "focus on better and safer roads".