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Board and management teams of Proton announced
By Chips on 29 September 2017 in Highlights, Local News
With the announcement of the new Board of Proton Holdings Berhad – incorporating members from the Zhejiang Geely Holding Group (Geely Holding), DRB-HICOM’s new partner – the company is now ready to accelerate forward and regain its leadership position in the local market that it lost 12 years ago. In fact, there is even the aim of becoming one of the top three brands in ASEAN in time to come.
The composition of the Proton Holdings board presumably reflects the shareholding of the two partners and Dato’ Sri Syed Faisal Albar continues his role as Chairman. Nominees from DRB-HICOM are Shaharul Farez Hassan and Amalanathan Thomas, the former being COO for Properties, Corporate Planning & Strategy and the latter being the Group Director of the Financial Services Division. From Geely Holdings is Daniel Donghui Li and Feng Qing Feng. Mr. Li is currently Executive Vice-President/CFO at Geely Holding while Mr Feng is Group Vice-President/CTO at Geely Auto.
All five gentlemen will also sit on the board of Perusahaan Otomobil Nasional Sdn Bhd (PONSB). Also on the board of this subsidiary of Proton Holdings are Dr. Nathan Yu Ning (Vice-President of International Business for Geely Holding) and Winfried Vahland (former Chairman & CEO of Skoda Auto).
On an operational level, the man at the helm of PONSB as CEO will be Dr. Li Chunrong, with Dato’ Radzaif Mohammed continuing his role as Deputy CEO. Dr. Li was recruited by Geely Holding last month for the role in PONSB and has a 30-year background in the auto industry in China, having worked with the Dongfeng Group in various high-level roles. His experience in joint-venture companies with Kia and Honda should certainly prove valuable in his new job. He is credited with having started the Dongfeng Passenger Vehicle Company (a subsidiary of the Dongfeng Motor Group) and successfully establishing the company’s design, development and production systems before sales and operations commenced in 2009. The Dongfeng brand flourished under his leadership as the total sales volume rose to 150,077 cars in 2016, a 50% increase from the previous year.
Now that the management teams are in place, the race is on to revitalise Proton as a brand and company. Everyone is mindful of how Proton was once the market leader and there is a strong desire to regain that position, at least in the home market. Dato’ Seri Syed Faisal said that Proton’s decline could be attributed to liberalisation and the change in the market and industry which took place in the early 2000s when Proton had just declared itself to be a world-class carmaker. He acknowledged that Proton may have been slow in seeing the change and adapting to it, which is why there has been a need for a strong strategic partner – a trend that has been taking place since the late 1990s in the industry.
When asked if there are lessons which the Malaysian side can share with its new partners, he said that there would need to be more attention to planning, especially for the longer term. His reply suggests that Proton may have taken things for granted when it had achieved dominance so easily and failed to give sufficient focus to the challenges ahead. Perhaps that’s the bad side of excessive protection and support by the government for too long – when there is assurance that there will always be food on the table, so to speak, the motivation to plan for the time when food has to be found is minimal.
Being able to be successful without government aid is possible as Li Shufu, the man who founded Geely, has proven. In fact, his entry into the automobile industry as a carmaker was even blocked by the government and his position as an independent entrepreneur was also not viewed positively by the government which felt that car-manufacturing should be done by only government-owned companies. Nevertheless, he persevered and found a way to achieve his goal even without getting government support.
‘Revitalisation’ of the brand is mentioned a few times in the press statement but much work has to be done to rebuild the brand image. Certainly, for Malaysians, Proton remains special but at the same time, the decline of the brand in many aspects has also caused disappointment. Dr. Li would have to explore ways to make the brand shine again and he understands that customer satisfaction is crucial. Customer satisfaction encompasses many aspects and includes the quality of the products too, not just the way customers are treated at the showrooms or service centres. This too will require a lot of effort to get Proton staff to take to heart. As in many corporations, there are lots of slogans and CEOs stressing customer care and satisfaction but while the desire is there – and genuine – getting frontliners to be truly committed to customer satisfaction is always a challenge.
With Proton’s own CAMPRO engines already too old to be able to meet stricter emission standards, Geely will provide new engines as well as platforms (below) for future models
Geely powertrain
“In Geely’s view, a key strategy to success is ‘Product, Product, Product’ and providing customers with good and right type of products,” said Mr. Li, the board member. He gave assurance that Geely will provide all the necessary support and resources to Proton to refresh its product line. This will include the latest powertrain technology, including technology for plug-in hybrid and hybrid vehicles.
“Proton’s existing engines can only meet the Euro-4 emission standards but Geely will provide new engines that can meet Euro-6 standards and beyond. Geely has spent millions on R&D to develop these powertrains but we are not asking Proton to pay any money for the powertrains and technology. What we plan is for Proton to make use of the new powertrains and further develop them for future models,” he said.
On future models, there will be a new model every year in the longer term but in the immediate future, some of the current models will remain in production because it takes at least 5 years to develop an all-new model. However, because Geely will provide some models to adapt from, the process can be shortened to 3 years. As an immediate step (and perhaps to show Malaysians something new as soon as possible), a midsize MPV will be launched by the end of 2018. It is widely believed that this will be adapted from the Geely Boyue which has been shown at some events in the past months.
Whenever talk of a foreign company taking over Proton has surfaced in the past, there has been much concern expressed by local parts suppliers. They have always feared that the new owner may be ‘cold-blooded’ and just terminate them if their prices are not competitive enough or their quality is unacceptable. Things may not be so drastic in this new partnership and as Dato’ Sri Syed Faisal explained, there are strong reasons for sourcing parts locally because of government incentives. “We would certainly aim for higher local sourcing as it will then bring Proton more incentives from the government,” he said.
However, he also acknowledged that production costs will need to be trimmed down and parts prices for Proton have been known to be high, which has made it challenging for the company to be competitive without government support. Nevertheless, as with the Japanese carmakers, it is likely that Geely will help the suppliers to become more efficient and productive, key factors in reducing production costs, as well as improve quality and reliability. Suppliers from China might also be invited to establish joint-ventures with local suppliers, a compromise to outright termination of local suppliers if they cannot meet the requirements.
There are plans to move all operations from the original Proton factory (left) to the much bigger one at Proton City in Tanjung Malim but this move won't take place for at least 5 years.
There are plans to move all operations from the original Proton factory (left) to the much bigger one at Proton City in Tanjung Malim but this move won’t take place for at least 5 years.
There has been much talk of the original factory in Shah Alam being closed down and operations moved to Proton City in Tanjung Malim. Dato’ Sri Syed Faisal said having two big factories has been an issue for the company all this while and there are plans to eventually consolidate at Proton City. However, this is likely to take place only in the early part of the next decade, probably in 2022.
The factory at Proton City, which cost RM1.8 billion, has plenty of capacity (believed to be as much as 500,000 units a year) and has often been seen as a worthy acquisition by foreign companies wanting to set up a regional production base in Malaysia. It is believed that Geely will also use the plant to make righthand drive models for sale under its own brand in the region.
A final word from Dr. Li, the new CEO: “I was nominated by both DRB-HICOM and Geely Holdings to turn Proton around and I believe the Malaysian car brand will soon be the No. 1 domestic brand and a leading ASEAN brand. To make this vision happen, Proton now has access to the global synergies, expertise and financial support it needs from the Geely family. I firmly believe that Proton’s best days are ahead of it.”
Written by Chips Yap
Chips Yap has been reporting on the motor industry for 40 years, covering a broad spectrum of topics from industry developments to new product evaluations. He specialised as a motoring journalist and started three motor magazines in Malaysia, as well as served in various roles for other publications and websites.
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This post has been edited by EnergyAnalyst: Sep 30 2017, 08:44 AM