Analysts slam brakes on 'Proton 2.0' idea

Malaysian 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 yesterday - 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.

An automotive analyst at Hong Leong Bank said: "The government needs to solve its financial woes first. A new car company requires high start-up cost."

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 yesterday 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 countries, which already have automotive name brands and access to the Malaysian market, to partner a new automaker.

Another analyst said: "Of the four countries mentioned, three have their own successful home-bred cars. It's difficult to see how Malaysia can contribute to that."

Proton vehicles being assembled at the company's factory in Selangor. Over the years, Proton has incurred huge debts and a 49.9 per cent stake in the firm was sold to China's Geely last year.
Proton vehicles being assembled at the company's factory in Selangor. Over the years, Proton has incurred huge debts and a 49.9 per cent stake in the firm was sold to China's Geely last year. PHOTO: BLOOMBERG

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

Proton has over the years suffered losses and incurred huge debts as other automakers gained traction, eroding its substantial market share. The Geely deal was meant to revive its fortunes, though Dr Mahathir decried its sale then.

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

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

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

Members of Dr Mahathir's coalition also oppose the idea, urging investment in better public transport instead. Parti Keadilan Rakyat member Azrul Azwar Ahmad Tajudin, an economist, said: "We should invest more in public transportation, not private vehicles."

END OF THE ROAD

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.

AN AUTOMOTIVE ANALYST, with a local bank.

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

A version of this article appeared in the print edition of The Straits Times on June 12, 2018, with the headline 'Analysts slam brakes on 'Proton 2.0' idea'. Print Edition | Subscribe