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Proton seeks more funds to develop new models
Publication Date : 05-03-2014
Malaysian carmaker Proton Holdings Bhd is seeking up to 3 billion ringgit (US$917 million) in development funding from the government and Petroliam Nasional Bhd (Petronas).
However, the national car manufacturer – which has appointed Abdul Harith Abdullah as acting chief executive officer (CEO) to replace Lukman Ibrahim – has not been successful with its efforts thus far.
“The International Trade and Industry Ministry (Miti) and Petronas have both declined to assist in the funding,” said a source.
Now a unit of DRB-Hicom Bhd, Proton has been seeking fresh funding to execute its transformation plan that will see new models being developed, including an electric car.
The national carmaker had first approached Miti last year for funding, but its request was turned down. The reason was that it couldn’t fully justify why it needed such funding from the government.
It later approached Petronas, but that attempt has been futile too.
Coincidentally, the futile attempts by Proton to secure funding come at a time when the position of former prime minister Tun Dr Mahathir Mohamad as Petronas adviser is a talking point.
On Dec 2 last year, Dr Mahathir had announced that he was quitting as adviser to Petronas. Subsequently, Prime Minister Najib Razak urged him to reconsider his decision.
Petronas president and CEO Shamsul Azhar Abbas has declined to answer queries on the position of Dr Mahathir in the national oil corporation.
“Ask the prime minister. It’s the prime minister who appointed him,” said Shamsul in reply to a question.
It has been reported that Proton has committed 3.8 billion ringgit in investments until 2017 and needs more capital to be competitive and achieve its turnaround plan. Perusahaan Otomobil Kedua Sdn Bhd (Perodua), meanwhile, has committed 1.8 billion ringgit until 2015.
Industry executives are puzzled as to why Proton deputy CEO Lukman quit his job a few weeks ago – the second time he has resigned.
The first was in July last year, but he was persuaded to return after a few months.
It came as a surprise back then, but auto executives are not surprised he has finally decided to call it a day at Proton. Word is that Lukman was a tough boss and employees had difficulty adjusting to his demands.
Auto executives are not sure if Proton’s turnaround plan, which has an ambitious target of selling 350,000 cars by 2018, would have been carried out effectively, given the turmoil in management and the friction within the top management of Proton.
“The plan is good and Proton has a real chance of pulling it off,” said one observer after Lukman left the company.
Proton is set to launch its global small car by June this year, but its financial performance in the latest quarter has cast some doubt on its prospects to compete with the liberalisation of the industry set to intensify under the latest National Automotive Policy.
Sales slumped by nearly 30% between end-September and December 2013 from its second quarter, and likewise, its market share. Proton had a good second quarter following the launch of the Saga SV, but could not maintain the sales stamina.
“It’s a challenging landscape and it can only get tougher and not easier,” said one auto analyst, describing the task ahead for Proton.
While Proton has its share of competitive issues, rival Perodua seems to be holding steady.
Perodua’s market share stood at 30% last year, and with sales projections expected to be flat in 2014 in an industry slated to see only a meagre increase in total industry volume, Perodua should maintain its iron grip on market share.
Proton, on the other hand, said analysts, could find it tough to maintain its 2013 market share of 21%.
*US$1 = 3.27 ringgit