Proton and Perodua

Proton and Perodua are really going to feel the threat of AFTA if they are not prepared by the year 2005. Government has helped them by deferring the AFTA from 2003 to 2005. So now it is up to the local manufacturers to come out with their own remedies to face AFTA. The truth fact is that nobody can escape from liberalization of car industry in this region.

From my opinion, Proton has already started preparing for AFTA. But is it enough? Sales have been projected to drop significantly for Proton once AFTA is implemented. One of the measures taken by Proton is in R & D sector. They have come up with first Malaysian design car. This is a milestone in Proton, which was realized using latest technology like Rapid Prototyping and commitment by the employees. Proton is also doing research and development with Lotus engineering and Petronas-Sauber Formula 1 team to come up with own engine. This moves in R &D sector is very important for them. Now they can show their own identity to the world rather than copying prototype of Mitsubishi cars. They have changed to a new logo that will give them more precise identity. Perodua still lack in this field, they still come out with Daihatsu prototype cars to manufacture in Malaysia.

Local manufacturers have to come with their own identity or brand if they want to penetrate the ASEAN market. In order to have own identity, they need to come out with their own model that is not available from other auto manufacturers. Daihatsu have already manufacturing base in Indonesia. So for Perodua it will be difficult task to penetrate the ASEAN market. Definitely their sales in Malaysia will drop in 2005. So to compensate that, they better penetrate other ASEAN countries car market.

Another main core thing that should be taken action is cost competitiveness. Cost control is very important. Our local cars cost is very high compare to the actual price of foreign car without tax and tariffs. Even Datuk Seri Rafidah Aziz has urged Proton to cut cost of the local production. If they want to be global distributor than their price should be competitive among car giants. Even though our capacity is small compare to other car giants, but if they want to challenge them then they have to cut the cost. Proton has informed that the new model Proton WAJA parts are 90 percent locally made. This is a good sign for local part manufacturers. However are the local parts cheap compare to foreign suppliers. However they should get alternative choice to reduce cost. Maybe they can buy some parts from other countries that are significantly cheap compare to local parts.

Another main thing that Proton should consider is quality of the car and its parts. Currently our car quality is not even par with foreign cars. So how are they going to go global? Quality is very important because most consumers will look into the quality of the car before purchasing them. They should improvise their quality of car. They should be strict in quality control. Even to maintain the local sales they have to maintain the quality and upgrade them to be higher than foreign cars. Proton car owners knew the quality of Proton cars before they buy the car. They didn't