Jan 26, 04 09:32am
Article about Proton in malaysiakini
Proton was not around when I drove in Malaysia 25 years ago, but 17 years
of living and driving cars in the United States has certainly opened my
eyes as far as quality of vehicles is concerned.
For car manufacturers selling their vehicles in the US market, building
quality cars is a given, at least it is if they expect to be around for
awhile. If not, they will simply not exist.
That is the reason why Fiat, Lancia, Maserati (recently and carefully
re-introduced), Rover, Lancia, Lotus, Peugeot and Alfa Romeo went bust in
the 1980s. Even Daihatsu, despite good quality (but building small cars),
could not make it in the US.
The Koreans, and Hyundai principally, during the early 1980s introduced
inexpensive cars in the US and fared poorly against the competition, which
was largely Japanese and domestic marques. The main reason for their
scrappy performance was poor quality.
Driven to near-bankruptcy, Hyundai and Kia re-engineered their cars and
re-introduced their latest models with 10-year warranties to back their
improved quality. This has resulted in their runaway success, which would
have been unheard of (or predictable) just a few years ago.
The point and lesson in all of this is that if you build world-class
quality cars, people will buy them. A malaysiakini reader once said
"...Malaysians need to overcome their bias about locally assembled cars."
The fact that Proton makes poor quality cars, or at least cars of
inconsistent quality, simply serves to confirm the bias.
My personal inference, being involved in the quality arena for over 14
years, is that Proton has absolutely no idea what real competition is. This
is so much like the Indian, Soviet Union (pre-disintegration), eastern
European and some other national car industries that made cars of dubious
quality and adopted a customer abuse policy with their take-it-or-leave it
attitude.
Then again, this is a Malaysian government-executed programme and as such,
it bears all the hallmarks of such an enterprise: ill-conceived,
poorly-executed, with virtually no accountability, usually resulting in
failure.
The way in which a venture of this kind, building a national car, was
undertaken at all was never really debated. This was a gigantic programme
that many sensible governments would debate to death before even opening a
hearing on it.
A simple analysis of success factors alone for a viable car manufacturing
operation in Malaysia would have nipped the idea in the bud at that time
and saved taxpayers millions of ringgit. However, as is typical with many
other mega-ventures of this nature in Malaysia, the half-baked idea is
translated into reality within a short while with very predictable results.
By the way, what was the strategy behind acquiring Lotus? It is not that
Lotus is a bad company. It is a very much a leading-edge engineering group
and one that I admired as a student during their Colin Chapman days.
However, acquiring a specialist group like Lotus implies a well thought out
strategy on the part of Proton.
In my line of work we do months of careful analysis of potential
acquisitions, study contributions, outline deliverables (by time periods)
and plans for sustaining the acquisition including details of
merging/integrating the acquisitions. Was this ever debated and
expectations (in terms of deliverables) ever outlined?
If Lotus was acquired to feed engineering expertise in engines, handling,
suspension, frame design, turbo charging etc, then where do we see this
expertise realised in the Proton models? I am not talking about cosmetic
tuning - you can do that without Lotus.
If that was the end goal anyway, why acquire it when you can contract on a
per model basis cheaply, as others have done? My personal view is that it
was an ‘awe-inspired’ acquisition to trick Malaysians into thinking that a
Proton-Lotus link implied Lotus-engineered cars.
If you look at the automotive scene today, there are just a handful of
major players, with mass-mergers (to remain competitive) being the order of
the day. What has happened is that competition has become so intense - new
model cycles are less than two and a half years now instead of five - that
quality is at an all-time high, exemplary customer service a pre-requisite,
warranties extended, safety is paramount (crash test statistics kill new
models over here) and attention to detail is fanatical.
To remain competitive, a viable mass-market car company (like Proton) needs
to invest very heavily in R&D. We are not talking millions, but billions of
ringgit. Proton does not have that kind of money to invest in R&D, and to
keep a manufacturing and distribution operation going.
Other than Toyota and Honda, the other Japanese manufacturers are
struggling to stay in the R&D game. Unless you have a niche market (like
Lamborghini or TVR, for example), you cannot go it alone, more so if you
are an unknown entity like Proton. If anything, being unknown, Proton
should have striven to deliver quality cars from day one!
Apparently, all this has escaped the notice of Proton. I was astonished to
find out that they had enjoyed price-protection privileges for quite a
while and had never bothered to improve upon their product or service.
Equally mind-boggling is that the Malaysian rakyat has been moulded, over
the years, into accepting quality defects in a new vehicle (and its
attendant customer service...er...I mean, customer abuse) as a matter of
course.
If any car-maker built cars of this quality in the United States, you could
expect to see them filing Chapter 11 (bankruptcy) within the year. Alfa
Romeo has postponed their entry back into the US several times. Peugeot,
Renault, Rover (except Land/Range Rover), Daihatsu and several others are
very wary of US market demands. Even the quality-imbued Japanese have
conceded the lower-end of the automotive market to the Koreans and no
longer compete in that do-or-die arena.
Quite frankly, after witnessing this automotive ‘take-no-prisoners’
landscape transforming for almost two decades here, I do not see Proton
taking on the Koreans...at least not in its current form. I think Proton
truly believed (and continues to believe) that it would enjoy
price-protection infinitely.
The tragedy of this kind of gross mismanagement is the rakyat who actually
fund the entire venture! I read with dismay that the government is planning
to re-introduce some other form of taxation after tariffs are lifted. This
kind of action only serves to promote more of the tidak apa attitude that
must form the core philosophy of Proton.
It is interesting to note that even in a failed enterprise, the Malaysian
hallmarks still apply. Rather than admitting failure, launching a
full-scale inquiry into the management of the venture, studying strategies,
outlining disaster recovery strategies, defining deliverables, tying senior
management compensation to measurable results, doing customer audits on
quality perception, and other usual benchmarks we engage in with any
business venture, what do we do?
The hallmarks are invoked once again: denial of a failed venture, more
capital infusion (throwing good money after bad), a ‘rescue’ tariff
protection in this case, or yet another potential Petronas-led bailout, and
a minor management shuffle, of course, capping it all: the absolute lack of
accountability for any of the foregoing.
Short of a joint venture with one of the majors, I do not foresee any
future for Proton in a competitive world. It is unable to define itself
clearly and its role in the automotive arena and has basked in the sunshine
of tariff protection for too long to know what competition really means.
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