The re-badging and new breed of Proton-volution X?

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Dec 09 2008
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Ford Motor Co. has declared it does not need rescue money as it claimed its cash-flow is alright. General Motors Corp. and Chrysler LLC however threaten bankruptcy is inevitable if their demand of US$15 billion is not given by early 2009. The question was would the top management from both ailing GM and Chrysler put the billions of dollars to good use if not supervised? Just like small kids you can’t expect these people to behave and serious enough about reinvent the company to become stronger, unless there’s a supervisor with a cane walking around. We’re talking about a huge amount of $15 billion here, mind you.

The automobile industry is getting so bad that Japanese giant Honda Motor Co. has decided to quit Formula-1 – the £300 million a year expenses is simply too much to chew. Malaysian former F-1 driver, Alex Yoong, found the race was too much for him and has decided to settle for A-1 but not before squeezing millions of dollars from lottery company Magnum for sponsorship. Of course people in the circle said if not for his father’s connection in the political arena Alex would still be driving go-kart. Even the money-making machine Magnum couldn’t continue to bleeds and it was the end of the sponsorship after three Formula-1 races in 2001.

Honda Formula 1Proton Holdings Berhad (KLSE: PROTON, stock-code 5304), famously known for defective power-windows, has recently found out that it has fall in love again with its previous partner – Mitsubishi Motors Corp. (TYO: 7211). The agreements signed were to re-badging a Mitsubishi to replace the Waja as well as to make available Mitsubishi technology to Proton. Instantly there were rounds of applause because Proton was started with the injection of Mitsubishi technology more than two decades ago. And it was Mitsubishi engine that jump-started Proton to capture the major domestic automobile market.

On paper the latest re-marriage was a win-win situation. Proton is dying for new technology to which Mitsubishi can provide while the latter is desperate for market shares. While it’s true that it will cost Proton very little money to gain access to Mitsubishi technology, the most important factor is the fact that Proton do not have to give up its equity stake unlike the failed partnership talks with both Germany’s Volkswagen (FRA: VOW) and US-based General Motors Corp. (NYSE: GM, stock). Frankly it doesn’t matter if Waja maintains its current engine and interior as long as there’re changes to the exterior to have “Mitsubishi” face plus the three-diamond logo. People will be flocking to buy the cars. Until now nobody really knows why Proton has such quality problem after so many years in business, not to mention thousands of complaints.

Proton MitsubishiMaybe it was the arrogance curse that Proton was invincible. Maybe the company itself was too huge in size locally that changes are hard to be implemented. Maybe it was too political to focus in getting the right person with the right acumen to drive the company ahead. Maybe it’s time to drain the bad blood and replace it with new fresh blood. But with Japanese automakers being selfish and share only out-dated technology, could Proton-Mitsubishi blinds the consumers once again? Who cares as long as the consumers feel good about the whole partnership and thought they were actually driving a Proton-volution breed of car.

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