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Scaling-Up

Despite being a late entrant in the Middle East market, the Malaysian auto major Proton has chalked out an aggressive plan to penetrate the regional market. Akshay Bhatnagar reports from Malaysia

December 2008
When you think of Malaysia, the visuals of natural rubber, palm oil and picturesque coastal plains and mountains come to mind immediately. But the Southeast Asian nation is also home to Proton, a major automobile group that employs 12,000 people. Though Proton may be a lesser known brand internationally compared to the much fancied Japanese, European, American and even Korean auto brands but it has been steadily ramping up its production facilities, engineering knowledge and distribution network over the years. Proton entered Oman in 2006 in partnership with Al Hashar and Company.

Looking Ahead
Proton started in 1983 as part of a national initiative to spearhead the automotive industrialisation in Malaysia. Currently, the 25-year old company has emerged as the largest manufacturer of automobiles in Malaysia. It enjoys a major chunk of the domestic market in the passenger car segment. It also has a sizeable distribution network in international markets including Southeast Asia, Middle East, Western Europe specifically UK and Australasia.

On the product range and engineering capability front, Proton group claims to have the expertise and technology to build small, medium, large size, sports cars, SUVs and MPVs besides the knowledge of building military vehicles, motorcycles, light aircrafts and watercrafts. Its current offerings include four-door family vehicles, two-door hatchbacks, executive sedans, as well as the world renowned sports cars from Lotus (Proton subsidiary).

The group has research centres based in Malaysia and UK to develop new technologies to create new autos. Through Lotus, the group provides consultancy services to number of OEMs and tier 1 suppliers. Overall, the group has spent RM4.3bn (one Omani Riyal is equal to approximately 9.4 Malaysian Ringgit) in R&D over the last five years and it has committed another RM5bn in the next five years.

Talking about the company's strategy for business growth, Proton's managing director Dato' Haji Syed Zainal Abidin B Syed Mohamed Tahir said, "Due to the ongoing global financial crisis, everyone is reviewing their business strategies. We have been cautious in our financial management. We don't expect to face any major impact of the financial turmoil on our business. We are going ahead with our expansion plans. The launch of Persona (the new 1.6L executive sedan) in the international market including Middle East is a step that direction. Persona is our core model and wherever it has been launched it has received an encouraging response." Proton has stated that it has already made over 59,000 bookings for Persona in Malaysia alone.

Adding on, he said, "We are also going to launch an MPV soon with the help of Lotus. It will further solidify our product line-up to include a high quality multi-purpose vehicle that can cater to the family-oriented contemporary lifestyle. We need to understand the Middle East market more. We are looking at turbo engines by 2010-11. It will be equivalent to 2.0L. We are also embarking on more fuel efficient engines. We are also planning for diesel variants as they are quite popular in markets such as India which we are eying. We are in discussion with a renowned international level OEM for it. We are also looking at developing a small competitive car. We expect to make it available by 2010. We are working on hybrid and electric technologies. We are also moving towards reducing the weight of our cars. We may also look at the development of a car jointly with Lotus which is more affordable."

Lotus has also unveiled a brand new thoroughbred named Evora, the first new Lotus model to be launched in over 13 years. It is expected to be launched in 2009. On the long term market strategy, he said, "our strategy for the next 10 years is to focus on ASEAN, China, Russia and India besides other markets. We expect Middle East to be a very important market for us. We are considering how Iran could help us in supporting the ME market. We have hired an ex-Toyota auto expert to focus on improving quality as per the requirements for exports market."

Proton is aiming at setting up production facilities in overseas markets as well as Dato' Haji said, "Towards achieving economies of scale, Proton will maximise localisation to reduce cost and, where a certain level of scale is achieved and commercially viable, there is potential for production hubs to be established in the respective targeted high-growth markets, translating to cost competitiveness and complementation of key components."

Though competition is going to be tough for Proton in most of the markets it is penetrating, but a sustained effort to meet the customer's demand for contemporary features at affordable cost and excellent after sales service could make it a winner.

Persona Personified
Further strengthening its presence in Oman's market, Proton recently launched its latest model Persona. Talking about the new model, Werner Koch, CEO of Al Hashar Group of Companies, Proton's sole distributor in Oman said, "Persona is a model that will get noticed and attract people not only for its looks but its practicality, smooth ride and fuel economy". Oman is the third country in the Middle East to launch Persona after Saudi Arabia and Egypt.

Persona promises to offer advanced styling, generous interior and expansive luggage space to the user. The vehicle engineered by Lotus is powered by the enhanced 16-valve DOHC Campro IAFM (intake air fuel module) engine aimed at delivering smooth drivability and riding comfort. It offers a displacement of 1597cc with manual or automatic transmission and acceleration from 0 to 100km/h in 12.4 seconds. It is equipped with dual airbags, ABS, EBD and auto-lock system. It is available in four colours including solid white, metal grey, tranquility black and solid red. The model won the 'Best Model of the Year for Malaysia' at the 2008 Frost & Sullivan Automotive Awards for the South East Asian (ASEAN) markets.

© Oman Economic Review 2008

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