Common platform to achieve growth, success
Proton Holdings Bhd chairman Datuk Nadzmi Mohd Salleh and managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir share with Sharen Kaur their views of what will drive the carmaker to long-term profitability
QUESTION: Does Proton require a strategic partner? What does Proton want?
Nadzmi: Proton is not handicapped. We are an independent car manufacturer and OEM (original equipment manufacturer) player. As a business organisation, we have to tailormake our business strategies. If we are a general player like some of our rivals, we can move forward easily. But if you don't have the volume, then there is nothing wrong with a collaboration with foreign carmakers as you can share the development costs. So I do not the see the reason why we cannot collaborate. People think that just because we are a national car(maker), we have to produce cars on our own.
Syed Zainal: A partner for Proton is not a weakness in Proton. If ever we have an equity participation by a global player, it shows there is credibility and confidence in us.
Proton is currently doing the right thing to grow its business and expand. Furthermore, we are not living on government subsidies as what people think. So there are options for us. We will do what is right for Proton and its shareholders. We want to produce products through sharing of a common platform with our partners and we will adopt key features that are in demand in those markets that we are in.
Q: What does Proton need to grow internationally?
Nadzmi: We discovered from our experience that we need partners in the countries we are exporting. When we have good partners in export markets, our volume will increase. We need to enhance the business and reinvent ourselves in terms of technology. In the longer term, we have to organise ourselves and produce good quality products. And in doing so, if we need good partners to collaborate on engineering development, model development or platform development, we will do it. But we will be very choosey. We are not going to marry anybody that comes along. We have to ensure that our products are competitive.
Syed Zainal: Partners are important as they will provide us with feedback on the future development of new cars in Proton. We find that our success is much higher in this manner. In the highly competitive market in Thailand, we are ranked number seven.
Q: Will the Exora be the driving force for Proton to move forward? What is Proton's plan after taking the MPV global?
Nadzmi: To move forward, we will work on improvements from the previous models and produce the most competitive product. We will look at features of the car. At the end of the day, we want to produce value propositions for the customers. In the product planning, we will look into the improvement of our existing models.
I was planning an MPV 14 years ago when I was the chief executive officer of Proton in 1992. I saw the trend then that Malaysian families cannot just depend on the smaller cars. An MPV can enjoy reasonably good margins and this augurs well to export the product.
We must also work on branding to position the product high. There are issues of fixed costs and variable costs that need to be tackled and we will look into this in great length.
Syed Zainal: For the Exora, we really looked into the cost structure. We reduced the development time to 18 months instead of over 20 months. Despite the Exora being longer and wide, it is a light car. We were able to do things hydrophobically, reducing the weight management of the car. This is what we call innovation. Every now and then, we will produce a new improvement.
Q: What is Proton's concern?
Nadzmi: We now have four national car manufacturers in Malaysia and this has compounded the problem in car sales. Thus, we have to grow and be an international player. We are now looking at Asean as the domestic market instead of just Malaysia. We see there is an opportunity to refine the domestic market.
We feel this is also an opportune time for Proton to build its export market as, with the economic downturn, there are many major international OEMs facing problems. It will take time for them to fix their problems. So we see a window of opportunity and are taking advantage of the situation to re-strategise.
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