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Malaysian Premier Vow to Keep Proton’s Badge



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Mar 24 2007
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During an interview with CNBC late Friday, Malaysian Prime Minister was quated as saying that the brand name “Proton” will not be wiped out amid negotiations on a possible merger with foreign partners. Abdullah stressed “We cannot decide to forget the name Proton and to allow it to disappear … Proton is a national car. Proton is a brand”.

Abdullah said while the government wants to see Proton become more competitive with a partner, it will insist on Proton maintaining its own brand name. He said Proton Holdings Bhd (KLSE: PROTON, stock-code : 5304) is currently only in talks with Germany’s Volkswagen (FRA : VOW) but those if negotiations failed, Proton could begin talks with US auto giant General Motors Corp. (NYSE : GM, stock). He further said a good foreign partner will help Proton develop in terms of models, engines and technology.
The Prime Minister seems to be sentimental with the pet-project of his predecessor, Mahathir Mohamad, despite the national carmaker getting seriously ailing with the soft-demand for automobiles in Malaysia. Or maybe he wouldn’t want to take the risk of firing a new salvo by scrapping Proton which might anger Mahathir who has “ceasefired” since his attacks at Abdullah’s administration recently. Furthermore, any hints on dropping the name Proton might give an impression that the majority Malay-workers of Proton might loose their jobs – a suicide mission to Abdullah at the current period when the rumors of early general election will be called at the end of this year, 2007.
The Malaysian government who owns 59 percent of Proton, including a 43 percent stake held by its investment arm, Khazanah Nasional is under intense pressure to find a partner for loss-making Proton, which has seen a sharp decline in sales due to increased competition from local and imported cars. Proton’s market share has fallen sharply after the gradual removal of duties which has made imports more affordable while a persistent reputation for poor quality and unimaginative models besieged the carmaker.
Other local companies that have expressed interest in Proton include Mofaz Sdn Bhd, Naza Group and DRB-HICOM Berhad (KLSE: DRBHCOM, stock-code 1619) but most analysts believe local companies do not have any value-add which Proton is urgently seeking.
What’s in the name if the company is ailing to the point of reporting losses quarter after quarter? What will the government do if the foreign partner requires the name to be dropped? Ask the potential savior to fly kite and get out from this country? Most probably – I believe the government still has cash to keep pumping into Proton’s coffer, out of pride. Petroliam Nasional Bhd (Petronas) and EPF (Employees Provident Fund) still have hundreds of billions of extra cash to bail out any new patient.
Current Stock price of Proton is hanging at the RM 7.00 level, mostly due to the report in the mid-January that General Motor is prepared to offer as much as 10 ringgit ($2.85) for each Proton share provided the U.S. firm is given control of the finances of Proton and manages its vendor system. Will the government takes-up this offer if the talk between Proton and Volkswagen fails? If the General Motor controls the Proton, will the government run berserk if GM decides to drop the Proton badge which synonym to TV cartoon ThurderCat?

I believe most of the owners of Proton cars are sick and tired of the low quality, poor service and lack of safety (Airbag and ABS should be the basic features) of the national car despite being in the automobile industry for more than two decades. It’s time to put the interest of consumers on top and ego of politicians on the last place. The Proton brand is as good as within the 20-plus million population of Malaysia but it’s not a known brand outside of the country – for obvious reason.
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