Proton | DriftJom - Automotive review website in Malaysia for Proton ,Perodua, Naza & others

Lotus Cars and its Malaysian owner Proton have dismissed speculation that the glamorous, but long-underperforming, UK sports car brand is about to change hands.

The two carmakers’ bosses said there were no plans to sell Lotus, and acknowledged that rumours of a sale were beginning to hit morale at the carmaker, its relationships with suppliers, and sales.

Fellow Malaysian group DRB-Hicom bought control of Proton last month from state-owned holding Khazanah Nasional in a deal due to be completed by the middle of March.

This fuelled speculation that the new owners might seek to offload Lotus, midway through management’s ambitious plan to restore the brand’s “Bond car” heyday by launching five new cars.

But Proton’s boss said that while he could not speak for its new owners, his company was committed to Lotus, and was not about to get “cold feet and suddenly stop everything”.

“As management today, our plan as Proton and Lotus is to continue the business plan based on what we did before, unless the new shareholder comes in and tells us what to do next,” Dato’ Sri Syed, Proton’s managing director, told the Financial Times. “So despite what you hear – rumours based on management disposing this or that – no decision has been made.”

Last week, Genii Capital, which owns the Lotus Formula One motor-racing team, said it might be interested in buying Lotus. “I think if there is a way that we think the company can be bought and run successfully, then of course we would be interested,” Gerard Lopez, the group’s chairman, told Reuters.

But Mr Syed said that while Lotus was in regular contact with Genii about their Formula One co-operation, the two groups had not discussed a sale. Genii in 2010 teamed up with F1 supremo Bernie Ecclestone in a failed bid to buy Saab from General Motors.

Dany Bahar, Lotus’s chief executive, denied a separate report that he was seeking funding for a management buy-out of the carmaker. “Absolutely not – this is pure speculation,” he said.

Mr Syed said that the sale rumours might be coming from potential investors with designs on Lotus. “There might be some interested party who’s out there, for a long time since before this takeover,” he said. “But why they’re stirring the pot, I don’t know.”

Still, the notion that Proton’s new owners might be seeking to exit the investment is not implausible. Lotus has long been seen as an odd fit for an Asian mass-market producer based halfway across the world.

The UK manufacturer has a respected name in racing and enthusiast circles, but sold only about 2,000 cars last year, and earned more by consulting for other carmakers than it did selling its own cars.

It has had a series of chief executives and owners since it was founded in 1948, but has made a profit for Proton in just one year since the Malaysian group bought it in 1996.

At the 2010 Paris motor show, Lotus signalled its ambitions to take on Ferrari and Porsche when it unveiled prototypes of five cars it plans to launch this decade. The cars drew positive reviews, tempered with some scepticism about how many of them would ever make it on to the road.

Today, the company’s expanding site in semirural Hethel, Norfolk, has the feel of a work in progress.

Construction is proceeding on an extension of its factory to build engines, which it currently sources from Toyota, and new models like the Esprit. A new Ferrari-type brand shop touts jackets and bags bearing the company’s regalia, and the site has its own test-track and in-house driving school.

Lotus cars are priced at the lower end of the sports-car segment. However, the brand recently tested the waters for a more expensive model with the Lotus Évora GTE, which it sold in a limited edition in Asia, and is due to go on sale in Europe from May priced at more than £100,000.

The car, Mr Bahar said, showed that “with the right ingredients, this is absolutely a brand, a company that can succeed in this tough market”.

Proton’s boss reiterated his message that the Malaysian company intended to stay the course too.

It’s something that we started the journey [on], and something we’d like to stick [to],” Mr Syed said. “ We have owned the business for 13 years ... I think we want to keep it.”

By John Reed in Hethel, Norfolk, www.FT.com

1. This car uses hot press steel body which is stronger than cold press. It has a 1.6 liter turbocharged engine equal to a 2.0 liter engine power. The engine complies with Euro-five standards.2. A whole list of feature has been incorporated. This includes Vehicle Seek Lamp, Wiper Auto Speed, Auto side door folding mirror, Push Button Start / Stop, Sensors for Automatic Wiper and Headlamp and GPS Antenna for Navigation System.3. Additionally it has Impact Sensing Door Lock, Continuous Variable Transmission, Security Alarm System, Immobiliser and Central Locking.4. The automatic version has Shift Lever with Tiptronic Mode and Paddle Shifter on Steering Wheel for seven gear changes. ABS to prevent skidding and BA (Brake Assist) to increase brake pedal force.5. There are many others features which enhances the performance of the engine and driveability of the car.

Those are the words from the advisor himself. Wow! those are very high level specification coming out from our local engineers and designers which we should be proud. As you may aware, there are few sneak-shots of front and rear portion of P3-21A appeared at local blogs as seens below.

Full version can be read below:

1. I stopped using Proton cars after I stepped down. I wanted to enjoy the superior quality of the high-end European and Japanese cars.

2. Proton was known for its cheap cars. The assumption is that it can never produce cars of quality as represented by European, Japanese and even Korean cars.

3. The people at Proton are unhappy over this reputation. They feel it is wrong to think that they cannot produce high end cars. It is just that the company policy was to produce run-of-the-mill cars. The Malaysian public expect Malaysian cars to be cheap. Cheap cars just cannot have the quality and the features of the more costly imports.

4. Proton people want to show that given the support they can produce quality cars.

5. The other day I test drove their latest model on the test track at Shah Alam. I can verify and assure Proton customers and Malaysians generally that this new model can match any of the Japanese or European quality cars. It was such a pleasure to drive. A foreign friend who knows cars, tested the car and says it is up to the standard of the up-market cars from Europe.

6. This car uses hot press steel body which is stronger than cold press. It has a 1.6 liter turbocharged engine equal to a 2.0 liter engine power. The engine complies with Euro-five standards.

7. A whole list of feature has been incorporated. This includes Vehicle Seek Lamp, Wiper Auto Speed, Auto side door folding mirror, Push Button Start / Stop, Sensors for Automatic Wiper and Headlamp and GPS Antenna for Navigation System.

8. Additionally it has Impact Sensing Door Lock, Continuous Variable Transmission, Security Alarm System, Immobiliser and Central Locking.

9. The automatic version has Shift Lever with Tiptronic Mode and Paddle Shifter on Steering Wheel for seven gear changes. ABS to prevent skidding and BA (Brake Assist) to increase brake pedal force.

10. There are many others features which enhances the performance of the engine and driveability of the car.

11. There will be several models with less features than I describe. But they are all superior to the other Proton cars.

12. Naturally the price would be higher though probable cheaper than imports with similar features and quality.

13. I believe this is a great car and Proton can be proud of it. Malaysians can be proud of it too. The extra Ringgit you have to spend will be worth it.

14. The car will be available in three months time.

or you can visit our beloved Ex-PM blog at http://chedet.cc/blog/

This is another hot new story about our local automotive company, Proton. It has been prolong for very long time for Proton to come into decision of either having strategic collaboration, partnership or management buy-off. Shares has been moved up and down, but nothing change. Business remains as usual for Proton staff.

Today, Nadzmi (current Chairman of Proton Holdings) revealed his plan to StarBiz reporter in general if he won the bid to own Proton. You can refer to complete excerpts as per below.

What are your plans for Proton?

Besides the increased utilisation of the Tanjung Malim plant, Proton needs to transform itself to be a global player, and I believe the upcoming model codenamed “P3-21A” will be the global car that will transform Proton's DNA.

The car will be a completely different car with better material and design coupled with modern features. At the same time, we cannot price the car very high. One thing is for sure, Proton's DNA will shift to a higher gear with the plans in place.

Nadzmi: ‘Proton can be restructured through strategic business units.’

I hope to do a lot more tie-ups with other brands, as Malaysia today has a lot of capacity, with more collaborations and on a multi-franchise business model, it would be easier to control the local automotive industry.

We need to re-look the export markets for Proton, as previous strategies have been targeting smaller markets. Potential countries we need to look at are China, Iran, India and the Asean countries.

The potential engine collaboration with Mitsubishi Motors Corp (MMC) is great whereby it reduces Proton's investment of producing a new engine to only RM600mil from a projected cost of RM1.7bil to RM2bil. Mitsubishi needs only 100,000 engines annually, and we came in as a perfect partner due to the volume Proton can take, coupled with the strategic location of Malaysia whereby it is not prone to natural disasters, like Japan and Thailand.

Not only that, we have a whole ecosystem of engine development in Malaysia. While an engine block could stay for 20 years, the cylinder heads and the engine management system are major improvements that we can make to increase the efficiency of the engines.

There will be more tie-ups as MMC is also keen to share its electric vehicle mechanism with Proton.

While the Hawtai collaboration presents a good opportunity for Proton to write back some of its investments on model development.

The fully amortised models that we have developed like the Waja and Exora, we can sell these designs to Hawtai as it lacks the models while it invested about RM3bil in an automotive plant.

If I can find a second home for these sunken investments in the form of the models that we have developed and amortised, it will provide another stream of money for Proton.

What do you think of Proton's current model line-up?

The present model line-up is an attempt to correct the past mistakes, like the introduction of the multi-purpose vehicle, the Exora. Despite its late entry into the market, it is still better than never, and now the present line-up is more reflective of market demand.

Do you think privatisation is the way?

I think I will take it private if you ask me what I am going to do, because you have to restructure the whole organisation.

To me, in the car industry, especially when you are producing economical class vehicles, you can't go for high profit and huge margins with low production. We are competing in a high-production low-price segment, where margin is very competitive and investment cost would be the key.

If you have a small volume, you would not have the capacity to amortise your development cost, which as a ballpark figure stands at about RM600mil to RM700mil per model, and this is only the investment cost for the body and engineering excluding the investments for engine.

How can Proton be restructured?

Proton can be restructured through strategic business units (SBUs), which would be easier for the group to look for talents, whereby we would seek experts in their specific field like manufacturing, marketing and engineering. It would be a lot easier to find a chief to handle the daily operations.

These SBUs could then be engaged by third parties to do jobs not exclusive to Proton, for example the manufacturing plant in Tanjung Malim. Proton can raise its utilisation rate by having tie-ups with other brands to assemble or manufacture their products.

I know the business. Contrary to what some might say ... that Proton needs a global OEM to turn the company around, Proton is essentially a brand with Asian roots.

How would it fit into the portfolio of a global OEM with its collaborations with MMC and other joint ventures?

It would clash with the interest of Proton whereby OEMs like MMC would not be willing to collaborate further as they would run the risk of exposing trade secrets to third parties in the form of another global OEM in the picture.

Interestingly, it has been posted at paultang.org with additional statement.

What do you think about Proton's future and Nadzmi's future after reading this? Well, we do not know.

As for Proton, these feedback from Nadzmi does not give any new strategy. In fact, SBUs idea has been suggested for Proton since last year. Generally, this management buy-out means continue the business as usual while having few cost reduction and re-structuring activities as usually happened to newly-owned company. At certain level, Proton relationship with Group Lotus might be at stake due to 'additional' statement posted at paultan.org. I am wondering whether the statement was coming from him, because he can do the 'cut-off' now since he is the current Chairman, right?

As for Nadzmi, if the management buy-out is a success, he can easily get the fund form the banks (foreign or local). It is not difficult to get funding from the banks. Why? Because they will make money either if Nadzmi's plan fail or success. If success, they got their money back with interest. If fail, bank can sell ('lelong') Proton (one and only auto company with RND capabilities in ASEAN region) to third parties with high return easily! Worst case, if Nadzmi lose his bid for buy-out, his chairman position will be taken by someone else, either from DRB-HICOM group or NAZA.

Anyway, these interpretations are just another interpretations..

Courtesy information from StarBiz

Proton Holdings Bhd and Japan's Mitsubishi Motors Corp (MMC) are in talks on strategic collaboration to further strengthen their competitiveness in the global marketplace.

Proton Group Managing Director Datuk Seri Syed Zainal Abidin Syed Mohamed Tahir said that the two parties were discussing joint production of engines in Malaysia and consignment production of MMC-brand vehicles at the Proton factory.

Giving more detail to that, here are the remark from the MD himself.

“The collaboration will also see the sharing of major parts and components between MMC's Global Small Car (GSC), which is to be launched next March starting in Thailand, and Proton's upcoming Global Small Car (GSC) and also provision of MMC's future technologies such as electric, plug-in hybrid and hybrid vehicle technology”

he said at a press conference after the group's AGM yesterday. Most of the automakers around the world are developing their GSC. Same goes with Proton and Lotus. Definitely, Proton and its fully own sub-company, Lotus is developing the GSC together by utilizing the same platform but with few design differentiation. Instead of GSC, Lotus prefer to use the term Lotus CityCar (LCC). Holistically, there are plenty of rooms for PROTON, MMC and LOTUS to share parts for their products.

Syed Zainal said that for a start, the parties would jointly invest in a power train to produce engines for MMC's vehicles. The details of the venture would be finalised in the next two months.

“This joint investment will help Proton reduce development cost and time, thus minimising our investment,”

he said.
Proton chairman Datuk Seri Mohd Nadzmi Mohd Salleh said that in collaborating with MMC, there would be no need for either company to swap equities or exchange shares.

“Both companies stand to gain with the economies of scale, which will lower the cost of development,”

he said. These days of globalization era, it is normal to have strategic collaboration by sharing parts, platform and production line. And those are not necessarily involving either share swap deal or equity exchange at all. This approach will enable Proton to have flexibility to make collaboration with anyone at anytime without limitation of how many company they want to work with.

Elaborate furthermore about this collaboration, it is really a win-win situation where for Proton;
1. PROTON can have more reliable engine compare to current Campro engine.
2. PROTON can have wider range of engine dispalcement (remark: currently Campro come with 1.3l & 1.6l only while MMC has a wide range of engine line-up).
3. PROTON possibly can 're-style' ('re-badging with minor styling change) MMC model as Proton model, especially for low volume segment (like Proton did for Inspira).

As for MMC;
1. MMC can have less taxation in ASEAN region due to the localization of few parts and CKD assembly.
2. MMC can utilize Proton production plant which having almost same setting (CAN-BUS diagnose area etc..) with their plant, thanks to the Inspira project.
3. Able to get royalty for any engine or platform use by Proton.

Generally, from my point of view, it will benefit Proton a lot than it will benefit MMC. Just to remind that, MMC has an option to do the assemblies in Thailand as well because they already have plant over there. But, they chose Malaysia anyway.

Additionally, with this collaboration we think that Proton might not be producing their own engines anymore. It is agreeable of their approach to save cost on development and risk on technical capability.

Finally, what model to be assembled by Proton as MMC product? It definitely should include the small SUV, Mitsubishi ASX (also known as RVR in Japan). Probably, we can see more ASX on the road in Malaysia in coming years. Or maybe we can see Proton ASX version with re-styled bumpers? (we know that Proton does not have SUV in their product line-up yet..) Cool...!

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