Proton aims to sell 400,000 cars by 2027

All eyes will be on Proton Holdings Bhd as the national car company plots its return to the top with Chinese strategic partner Zhejiang Geely Holding Group Co Ltd in the driving seat.

PETALING JAYA: Proton Holdings Bhd has drafted a 10-year plan that includes turning the company around “as soon as practicable”, retaking local market leadership and becoming one of the top three carmakers in Southeast Asia.

In the business plan seen by StarBiz, Proton aims to cut cost across the board by 30% from this year, improve car quality and increase annual production gradually to 400,000 cars by 2027, from under 100,000 units last year.

The national carmaker, which has been bleeding and burdened by heavy debts, sold only 70,991 units of cars in 2017, lower than the 72,291 units sold in 2016. This was a far cry from 204,900 units sold by market leader Perodua – the second national carmaker.

“The first three years is the most critical period for Proton to turn around. Company-wide effort is being harnessed to achieve this objective,” says the plan.

The plan, drafted by Proton’s management team headed by new CEO Dr Li Chunrong from Geely, is expected to be presented to the Government for approval.

In fact, Proton has started its process of cutting cost. Li recently directed auto parts suppliers to reduce their prices by about 30% as they have been selling car components to Proton at 30% above market price.

Proton has also started work on improving quality. Last year, car quality was improved by 30%-50% using a stringent system aligned to the international standard of Volvo cars.

By the end of this year, Proton is expected to achieve the same quality standard as Geely cars in China, according to the plan.

Proton wants to achieve long-term sustainable growth. The plan sates: “Geely’s technologies and experience in turning around Volvo are key factors contributing to the growth of Proton and the local car industry.”

China’s Zhejiang Geely Holding Group acquired a 49.9% stake in Proton from DRB-Hicom Bhd last June. It also bought a 51% majority stake in sports carmaker Lotus Cars.

Since acquiring Proton stake, Geely has acted to instil confidence in Proton. Last December, local car dealers were invited to China to view Geely’s operations and the high-end technology employed in the making of Geely-Volvo cars.

The key programmes Geely has planned for Proton will include infusion of technologies and new energy vehicles.

Mindful of Malaysia’s local concerns, Proton has localisation targets in its business plan. From four years from now, 80% of Proton’s components and services will be sourced locally. But vendors must place strong emphasis to quality, cost and reliability.

To optimise investments, Proton’s focus will be directed to productivity, quality and cost competitiveness, as well as enhancing brand value, says the plan.

Within the plan, aggressive business targets have been set by 2027. Proton aims to introduce three new car models, upgrade four current models and cut cost by 30%.

In volume projection, car output is to hit 200,000 units in 2020, above 300,000 in 2023 and 400,000 in 2027.

In reviving Proton, the new management’s first major focus is to make Proton profitable “as soon as practicable”.

In manufacturing strategy, production expansion will be moved to Tanjung Malim rather than Shah Alam for cost and space considerations. Proton will upgrade the capability of its talent and staff.

As for its marketing strategy, Proton will increase its sales centres to 109 by October this year from current 75.

Within 10 years, Proton wants to grab 30% market share in Malaysia and 10% of Asean market share. Exports are to account for 25-30% of its annual sales.

“Infusion of Geely’s advanced technologies, jointly developed with Volvo, will leapfrog Proton’s product propositions and attractiveness to the market,” declares Proton in the plan.