EDARAN Otomobil Nasional Bhd (EON) and Perusahaan Otomobil Nasional Bhd (Proton) have finally reached an agreement on the distribution of Proton vehicles, which will allow EON to continue distributing Proton vehicles until Dec 31, 2009, with a minimum allocation of 100,000 units per annum.
Under a memorandum of agreement signed yesterday with Proton Edar Sdn Bhd, a wholly-owned subsidiary of Proton, EON has been appointed super dealer to undertake sales and after-sales support for Proton vehicles in the country.
EON will be able to sell all Proton models, including those that were previously handled exclusively by Proton Edar until the expiry of the existing agreement between Proton and Proton Edar
The Proton models sold by Proton Edar will be made available through EON's network in stages, EON said in a statement to the KLSE.
Existing margins on all models currently sold by EON shall be maintained, and margins currently enjoyed by EON for all models or additional variants not currently sold by EON shall be mutually agreed between the parties.
EON as a super dealer will be allowed a preferential margin from the other dealers and will not be required to make any product development contribution,'' said EON managing director Datuk Adzmi Abdul Wahab.
The previous distribution agreement between EON and Proton had lapsed about three years ago, and two contentious issues had arisen over product development contribution by EON, which had also wanted to distribute other marques.
EON public relations consultant Ghazalie Abdullah confirmed to StarBiz that it would not be required to contribute to the research and development (R&D) costs of Proton vehicles.
A fund manager at KLCS Asset Management Sdn Bhd, Choo Swee Kee, said the announcement removed uncertainties that had been clouding EON's position for some time. The flexibility given to EON to sell other marques is also very favourable, he said.
Effective January 2003, EON had secured the rights to sell Audi and Volkswagen vehicles.
An analyst agreed that the latest development was excellent news for EON, as the issue of R&D cost sharing had previously been a bone of contention between the company and Proton.
The benefit to owners of Proton cars is that they can now look forward to wider after-sales support from both EON and Proton Edar.
With the new agreement, a Proton car owner can now send his vehicle to either a Proton Edar or EON service centre for servicing, maintenance or repair work, Ghazalie said.
EON sold 125,860 Proton vehicles in 2000, 135,578 units in 2001 and 125,859 units last year.
The statement said the super dealership agreement would not impact the earnings and net tangible assets of the EON group for the current financial year ending Dec 31, 2003. For the financial year ended Dec 31, 2002, the company had reported a net profit of RM476.6mil.
EON said the signing of the agreement reaffirmed its commitment to remain as a key participant in the national car project, and is also in line with its strategy to focus and maintain its position as a key player in the automotive sector which is its main core business activity.
Meanwhile, Proton said the agreement marked the culmination of negotiations between Proton, EON and Proton Edar to streamline and rationalise the Proton sales and service network in Malaysia leading to the consolidation and strengthening of Proton's brand presence, a key strategy in the face of Afta.
EON shares closed 20 sen lower at RM7.90 yesterday on volume of 47 lots, while Proton finished 40 sen higher at RM8.00 with 1,206 lots changing hands.
EON and Proton Edar command 60% of the total passenger market. They sold 214,373 units last year.