Automaker Proton Will Not Get Bailout, Says Malaysia
For those of you that have been following the Proton saga, the latest is that the company is still looking for an investor/partner, the two leading candidates for this potential partnership are still GM and VW, and the current majority owner, the government of Malaysia, says no way to a government bailout.
Proton has sustained losses ever since Malaysia’s new-car market was opened up to outside competition, and the talks aimed at finding a partner have not gone well. The government’s official stance on the matter is almost nonchalant; they exude optimism that a partner for Proton will be found shortly. However, in their private discussions, it is believed that Proton’s ebbing fortunes and their cloudy future have the Malaysian government quite concerned. The government owns Proton through a state-investment firm named Khazanah Nasional Bhd.
Both GM and VW could use the manufacturing capacity and the market presence that Proton would give them in the part of the world Proton currently operates in, but so far the asking price has just been too high. It appears that both GM and VW are prepared to wait.
Proton, launched in 1985 under a previous government administration, has a large, very modern plant north of Kuala Lumpur that is currently under-utilized by approximately 60%. This plant would provide any new partner with instant low-cost production capacity in Southeast Asia, whose population is eager for car ownership, and is also, not incidentally, twice that of the United States at around 600 million people.
2006 Proton Savvy
Proton has a deserved reputation for making cars that are of mediocre quality, has models that are as old as 10 years old that have been virtually unchanged in those 10 years, has a poor service and parts network; and once the market was opened up, Malaysians voted with their wallets, snapping up Toyotas, Nissans and Kias. With their domestic market collapsing, and no real presence in any foreign markets, Proton is on shaky ground. If a sale doesn’t happen soon, there won’t be much value left in the company.