MARKET SUMMARY Proton is the Malaysian national automobile manufacturer (Malay acronym for Perusahaan OTOmobil Nasional, 'National

Automobile Enterprise'), which was established in 1983 under the direction of the former Prime Minister, Dr. Mahathir Mohamad. Proton Holdings Berhad, the holding company, is listed on the Bursa Malaysia. Based on technology and parts from Mitsubishi Motors, production of the first model, the Proton Saga began in September 1985 at its first manufacturing plant in Shah Alam, Selangor. Initially the components of the car were entirely manufactured by Mitsubishi but slowly local parts were being used as technologies were transferred and skills were gained. The 100,000th Proton Saga was produced in January 1989. Until the end of the 1990s, the car's logo featured the crest from Malaysia's coat of arms, featuring a crescent and a fourteen-pointed star. The new Proton logo features a stylized tiger head. In 1993, a model called Proton Wira was introduced based on the Mitsubishi Lancer/Colt. More than 220,000 units were sold between 1996 and 1998. Proton Perdana, based on the Mitsubishi Galant/Eterna, was first produced in 1995, intended for higher end market. The Proton Waja (Proton Impian in UK), which launched early 2001, is the first car model designed internally by Proton. By 2002 Proton held a market share of over 60% in Malaysia, which was reduced to barely 30% by 2005 and is expected to reduce further in 2008 when AFTA mandates reduce import tariffs to a maximum of 5%. (See "Trivia" section for update on tariff implementation) With the acquisition of Lotus technologies in 1996 from ACBN Holdings (a company owned by the owner of Bugatti), Proton has gained an additional source of engineering and automotive expertise. This led to the production of Proton Gen-2 which was code name Wira Replacement Model (WRM) before the launch. The Gen-2 is the first of cars to be manufactured and assembled at the new manufacturing plant in Tanjung Malim, Perak which is part of Proton City development project. The plant was opened in 2004.

On 8 June 2005 Proton introduced the second model to be manufactured in Tanjung Malim, the 1,200 cc 5-door supermini, the Proton Savvy. Both the Gen-2 and Savvy, were models that MG Rover was looking to rebadged when the British firm entered into collaboration talks with Proton. However these joint-venture talks were unsuccessful and MG Rover subsequently collapsed. In 2007, Proton launch its new sedan as replacement version for Wira Sedan but with new name, Persona. The new Proton Saga replacement model (codename Proton BLM) was launched on 18 January 2008. The new Saga is based on the Savvy platform, but using Campro 1.3L instead of Renault engine. It was announced on August 8, 2008 that Proton is developing a new, fuel-efficient hybrid car to beat rising costs and address environmental concerns. Prime Minister Abdullah Ahmad Badawi told reporters that he had already test-driven the car and urged the company to continue researching energy-saving technologies. As of 3 August 2008, Proton has produced 3 million cars since 1985, where the 3 millionth cars is a second-generation Saga. TARGET MARKET Proton has exports cars to the United Kingdom, South Africa, and Australia and the company is aggressively marketing its cars in several other countries including the Middle East. Besides that, Proton cars has also been exporting a small volume of cars to Singapore, Brunei, Indonesia, Nepal, Sri Lanka, Pakistan, Bangladesh, Taiwan , Cyprus and Mauritius. 14,706 Proton cars were exported in 2006. Recently Proton returned to Guangdong, China, where it did business in the past but withdrew after having poor sales record. In July 2007, Proton signed an agreement with Youngman Automobile Group Ltd. Co., paving the way for the national carmaker to offer its products and services in China. Under the agreements,Youngman will import 30,000 Gen.2 CBU (completely built-up) units and resell them under its own EuropeStar brand and eventually develop a new range of Made-in-China cars with the engineering services provided through Proton's Lotus. Proton

is expected to ship 1500 cars a month for 20 months starting December 2007 to fulfill the order. Proton began its exports from Malaysia to other right hand drive markets like New Zealand in the late 1980s to fulfill consumers needs based on culture situation, but its success was mostly limited to the United Kingdom where it entered the market, along with Ireland, in 1989. They advertised there with the slogan Japanese Technology, Malaysian Style. Proton cars proved popular among budget-oriented motorists, and like Japanese and South Korean models before them, led to the demise of manufacturers such as the Soviet Lada and ex-Yugoslavian (now Serbia) Zastava. By the 1990s, Proton had withdrawn from the New Zealand market after offering only the Saga four-door and Persona five-door models. The company also exited the Irish market in the early 1990s, following limited success in that country. The Persona and Natura models were sold in Chile briefly during the late nineties by a local Nissan importer, but few were sold and the venture ended after two years. Proton sales seem to be slowly declining in the United Kingdom with 2008 sales at 1518 (0.07% share of the market), compared to 2752 in 2002. These figures are insignificant compared to 2008 UK sales of 28,036 for Korea's Hyundai and 29,397 for Spain's SEAT. Proton also exports cars to Singapore and Australia, and now produces models in left-hand drive, for export to continental Europe. An entry into the US market was considered by Malcolm Bricklin following Hyundai's successful launch in the mid 1980s. However, exports to the US never materialized, as the cars required hundreds of changes to meet American safety standards in order to secure coverage from auto insurers and satisfy legislative requirements. Proton export models still do not comply to all environmental standards such as emission limits. The model that Malaysia has followed with the formation of Proton may be used as a case study for rent seeking as tariffs on imported cars rose almost immediately following the formation of Proton. Also AFTA agreements on relaxing entries into the ASEAN market space had exemptions specifically for Proton. The Malaysian government gained a

Proton cars were imported into Trinidad and Tobago between 1993 and 2002. This allowed Perodua to overtake Proton as the country's largest passenger carmaker for the first time. In the period ending December 31. Proton has also suffered three consecutive quarterly losses.6% market share. The Employees Provident Fund (EPF) acquired an . Total losses in 2007s financial year climbed to $169 million. MARKET GROWTH Proton market growth have been drop in 2006. coupled with an average security system. The bankruptcy of the dealership forced the exit of Proton from Trinidad and Tobago in 2002. made it easy picking for a potential thief. the vehicle was a success as far as handling was concerned which meant that. In the United Kingdom. The Satria GTi also sported a "Lotus Ride & Handling" badge which. H. the car was somewhat out of reach to younger drivers due to high insurance premiums.538 for the Malaysian market. with a 41. the car company lost 281. 2006. they are identified as being a vehicle popular with elderly people.8 16-valve Double Overhead Cam Engine (which produced 133bhp) a number were purchased by Octogon Race Circuits and used as track cars at Silverstone and Brands Hatch racing circuits. Proton cars suffer somewhat from a poor public image.3 million ringgit.5 million ringgit in 2005. However. They are considered deeply unfashionable with younger drivers.three-year exemption for Proton from 2002 to 2005 where entry tariffs had to be lowered to 5%. In 1998 Proton attempted to change this by introducing the Proton Satria GTi however.4% from 166. This was replaced by other duties resulting in no net decrease in automotive prices for importers. They were sold through a local dealer. Compared to a profit of 86.5 million ringgit in 2006. its lowest in at least seven years. Proton's sales dropped 30. coupled with its 1.E Robinson Ltd. with a later report indicating a 55% fall of sales to 962. while Proton's market share fell from 40% in 2005 to 32% in 2006. Proton blamed discounts from rivals.118 in 2005 to 115. Only the Saga and Wira ever reached this market with the Wira enjoying modest sales success.

The group has also benefited from its revenue diversification program with income from sale of rights for use of its intellectual property.additi al 2007. PROTON understands the importance of introducing new products and models that meet the expectations of the market. ares i a transacti n t at spanned bet een January 5 and January 12. The increased revenue generated from increased sales volume.6 billion compared with RM . PROTON spent over RM500 million on R projects and activities. PROTON is committed to further enhance its R and product development activities with a view to further invest in projects that meet the requirements of the market and allow for quick commerciali ation. In the last financial year alone. was mainly due to the introduction of PR TON¶s two new models. This is clearly demonstrated by the good reception to the PER ONA and SAGA. For the current financial year ending 31 March 2009. in-line with this philosophy. The PERSONA and SAGA are planned to be launched in PROTON¶s major export markets from June 2008 onwards. in its export markets. the PERSONA and the SAGA. . PROTON expects to significantly improve its exports performance further. In 2008 i proved performance was achieved on the back of increased revenues to RM5. As such. given the new product range.9 billion in the previous year.

compared with one for every 30 in neighboring Thailand and Indonesia After that. The focus on cost management resulted in cost savings for new models. These rationalization initiatives enabled Proton together with vendors and dealers to deliver improved quality of service and be more competitive.SWOT ANALYSIS Strengths Ties with other ASEAN markets are strengthening all the time through AFTA induced tariff reductions. financial and corporate to better equip itself in the years ahead. which will provide advantages for carmakers basing themselves in Malaysia. with Proton losing market leadership for the first time in 2006 (albeit to fellow national producer Perodua). particularly Chinese manufacturers such as Geely Car ownership levels are relatively high at one car for every four people. Proton has also made commendable progress to bring about other operational improvements. It will adopt a three-pronged thrust namely development of market-driven products. the existing quality issue can affecting brand image caused by active service . In addition to successes in product portfolio. which were then passed on to the customers through competitive pricing. Emphasis on the elevation of the automotive eco-system saw the strengthening of the vendor base and dealer network. Proton will continue to strengthen itself in all aspects to operational. with General Motors (GM) forming a tie-up with DRB-HICOM in August 2007. Protectionist measures are still barring new entrants. Weaknesses The national industry is in decline. The market continues to attract investment from major carmakers. focus on high growth regional markets and a production strategy that achieves economies of scale.

Proton¶s export plans could help to offset its declining domestic influence and improve its global performance. inability to satisfy customers' needs. inability to penetrate export markets. Funds shrinkage can influence result in Proton inability to introduce new models. The models will be sold under the Europestar brand by distributor Youngman Automobile Group. which would act as a gateway to Africa and West Asia and boost the carmaker¶s exports. According to Proton Managing Director Syed Zainal Abidin Syed Mohamed Tahir. confirming that a market for the company¶s models already exists.000 units in China by end-2008. Phranakorn Auto Sales will initially sell Proton models in 20 dealerships. with the network due to double within four years. The company is evaluating a plan to build a production plant in Egypt. inability to introduce real new models. Egypt provides a large market but could also act as a base to countries such as Saudi Arabia and Sudan. no sense urgency. although this will change to completely knocked down (CKD) kits for assembly from mid-2008. Plant utilization low can also inability to retain and cultivate talent. appointment of top management and design. Opportunities The entry of Danish vehicle tuner Kleeman could provide a boost for the premium vehicle segment. Proton has also appointed a Thai distributor. Starting in November 2007.units such as political interference by Tun Porsche on vendor selection. 2 and Savvy models in African markets. which was appointed in July. Elsewhere in Asia. Proton also plans to sell 30. Malaysia¶s Proton has set its sights overseas. Proton will initially export completely built units (CBUs) to China. Faced with declining domestic sales and uncertainty regarding a strategic partnership. . corporate governance and complete numbness of developments in the auto industry. no economies of scale. Proton already sells its Gen. such as Egypt and South Africa. Talks with Indian distributors are underway but no concrete arrangements have been made.

leadership of the passenger market shifted for the first time ever from . Perodua sold Perodua Myvi. In 2006. For every Proton Savvy sold by Proton. However. with the two firms¶ combined market share declining. This time however. chief executive of stateowned Proton. Proton has been particularly hard hit. beating Proton monthly sales figures by 763 units. According to Mahaleel Ariff.000 units. A bloated workforce and a lack of new models have not helped the firm. Other than. Malaysia¶s output capacity has now reached 700. In February.408 units in 2005 to 503.284 units. Proton and Perodua has been at each other¶s heels since December 2006 when Perodua outsold Proton in monthly sales by 99 cars. the Malaysian Automotive Association reports that Perodua¶s monthly sales have topped Proton by a massive 4. the company lost leadership of the market for the first time.574 units) as opposed to proton¶s 30. with the double-edged sword of long-standing government protection militating against efficiency.048 units in 2006. After that. The competitive position of state-owned carmakers Proton and Perodua has remained a key focus for the Malaysian automobile industry in recent years.35% is 9. The Myvi has proven to be a stunning success. COMPETITOR ANALYSIS Malaysia has become a hotbed of production activity in recent years thanks to a raft of new assembly licences granted to international manufacturers. making it have a market share of 44% (13. of which his company and fellow national Perodua account for 500.290 units.Threats Malaysia¶s trade dispute with Thailand over non-trade barriers in the automotive industry could hamper the export projects of major carmakers Burgeoning capacity levels of around 700. Perodua¶s lead was short lived when Proton outsold Perodua the following month by 550 cars.000 units could result in a supply glut Thailand¶s µDetroit of Asia¶ strategy threatens other manufacturing bases in the region.000 units. production fell from 563. falling behind Perodua. Perodua outsold Proton again.

. allowed it to overtake Proton in passenger-car sales in 2006. Perodua again made its mark. Finally that. fuel-efficient vehicles. Toyota¶s share of the total market is double that of its passenger car share with 16. its subcompacts do not directly compete with larger. some major manufacturers are still absent leaving opportunity for extra competition. Honda Motor Company Ltd.national manufacturer Proton to local rival Perodua in 2006..4%.538 units or 32% of the market.733 units.A. competitor is Toyota Motor Corporation. claiming 32% of the market from sales of 155. The market scores 5 out of 10. as well as an emphasis on small.. The overseas brands saw their combined share of the passenger market fall slightly from 23% in 2005 to 22% in 2006. Shenyang Brilliance Automotive Company Ltd. on the other hand.419 units. boosting its market share from 32% in 2005. more expensive Proton offerings. to 115.706 units. Isuzu Motors Ltd. Despite increasing numbers of carmakers launching production activities in Malaysia. Hyundai Motor Company Ltd. increased its sales by 14%. Mazda Motor Corporation. to 152. Yuejin Motor Group Corporation. while Proton trailed with 24% from sales of 115. It outsold Proton in the domestic market both in 2006 and 2007. Another that. against the Japanese brand¶s 5. to 42%. .7% with Honda pipped for fourth place by local firm Naza on 6. Perodua¶s successful tie-up with Japanese manufacturers. Kia Motors Corporation and Toyota Astra Motor PT. Mitsubishi Motors Corporation..5%. In terms of total sales for all segments. Perodua. Daewoo-FSO Motor S. The competitive environment category measures the opportunity for new market entrants. The company has 140 sales outlets and 37 service branches and 113 service outlets across Malaysia. as the domestic giant¶s sales fell by 30%.. However. based on existing manufacturers and brands in the country.

grooved taillight clusters and rear number plate repositioned to the bumper.Proton Saga (1985) . Proton Saga Iswara (1992) In 1992.Proton Wira (1993) . side mouldings.Proton Iswara (1992) .Proton Putra (1995) .Product Offerings .Proton Staria GTi (1994) . Originally based on the 1983 Mitsubishi Lancer Fiore.Proton Savvy (2005) .Perdana V6 (1998) . before a successor designed in-house by Proton was launched to replace the ageing platform in 2008. Modifications included slimmer headlights. The Saga is also the longest surviving model produced by Proton. plastic bumpers.Proton Juara (2001) .Gen-2 (2004) . soldiering on for nearly 22 years. This particular model is .Proton Tiara (1996) . the Saga was given a facelift and its name expanded as Proton Saga Iswara (also known in short as Proton Iswara). Since 1985.Proton Waja (2001) . after a species of butterfly.Arena (2002) .Proton Persona (2007) Proton Saga (1985) The Proton Saga is the first car produced by Malaysian auto manufacturer Proton. the Proton Saga and its variants contribute to most of Proton's sales and revenues. the Saga first debuted in September 1985 and retained its core Fiore design for two decades. coloured door handles.

The name Satria which means knight in Sanskrit was chosen for Proton's 3-door hatchback to reflect the sportiness of the car. Due to the modification. boot space was reduced by half to accommodate the NGV tank and there are only a few petrol stations by Malaysian oil-giant Petronas.used as taxis in Malaysia and some are converted to NGV. Proton Wira (1993) The Proton Wira is a car manufactured by Malaysian carmaker Proton. when a second generation Saga was introduced as a sub-compact model instead. The Saga continued to receive minor updated until 2008. known as Proton Satria Neo was launched on 16 June 2006. a facelifted version of Proton's first model. The Wira was intended as a newer alternative to the Proton Saga Iswara. Proton Putra (1995) . released as a four-door saloon and four-door hatchback beginning 1993. the Proton Saga. Proton Staria GTi (1994) The Proton Satria was a hatchback produced by Proton. as a flagship compact model for Proton. The new Satria Replacement Model (SRM). Production started in 1995 for the first generation and ended in 2005.

the car is a 2-door sporty coupe based on the Mitsubishi Mirage.1L engine and featured a different grille. Its successor is the Proton Savvy. Considered by many as one of the better looking of the Mitsubishi-based models. It was built under licence from PSA Peugeot Citroën by Proton from 1996 to 2000. The original Perdana soldiered on for a short while before it was dropped. Proton Juara (2001) . The so-called Proton Perdana V6 also had a new bodykit and 16" rims. Perdana V6 (1998) In 1999. Proton shoehorned a 2. The Tiara was powered by a 1. After that.0 L 6A12 V6 engine (also sourced by Mitsubishi) into the Perdana. Proton Tiara (1996) The Proton Tiara was a supermini class 5 door compact car based on the Citroën AX. the Putra was well-received and commands good second-hand value. tail lights and bumpers than the Citroën AX.The Proton Putra is also sold in the United Kingdom and Australia as the Proton Coupe or Proton M21. With Lotus -tuned and upgraded suspension settings. the car handles well through tight corners and it is a good high speed cruiser.

With a selling price of about twice that of a Waja. . as the CamPro was originally developed for the Waja. the car was fitted with a Cam Pro engine which has been re-tuned to boost the horsepower to 86 kW (115 bhp) and 155 N -m of torque. making the Juara the first van to be manufactured by Proton. The facelifted 2007 Proton Waja was launched on 19 January 2007 with the new grille nearly identical to the Proton Savvy. meaning "champion". The Waja was also released as the Proton Chancellor in late 2005. It is fitted with powertrain from the Proton Perdana V6.The van's name was derived from the Malay language.800 cc variant. The name Impian was chosen as it was considered to be a more pleasant sounding word for the international market. However. In its marketing campaign. including a space-robbing rear centre console that restricts seating to four persons. a variant for the executive market with a 250mm wheelbase stretch and luxury fittings and accessories. This made it go full-circle. which was powered by a Renault engine). the Chancellor is a very rare sight on Malaysian roads. Proton Waja (2001) The Proton Waja (Proton Impian in Europe) is the first Proton to be designed and styled in-house. Proton decided that the Juara is essentially a Mini-MPV (Multi-Purpose Vehicle) and became the platform in its advertising and promotional campaign. The design and production of the Juara marked a notable departure from Proton's traditional preference towards saloons and hatchbacks. The word Waja translates into English as "steel" while Impian translates into "dreams" or "ambition". In January 2006. the car's chassis and engine were sourced and adapted from Mitsubish (except for the 1. hence debuting in the Proton Gen-2.The Proton Juara was a microvan produced by Malaysian carmaker Proton between 2001 and 2003. but was deemed not ready for production when the Waja was launched.

due to a late decision to drop Camshaft Profiling from the engine feature-list in production models.2. Later models used improved quality materials and assistance from the TUV of Germany to help maintain the quality improvements. The Gen.Arena (2002) The Proton Arena (or the Proton Jumbuck in the United Kingdom and Australia) is a small front wheel drive coupé utility manufactured by Malaysian automaker Proton. a hatchback design. the Arena is the only form of pickup truck by Proton.2 was the first Proton to receive the (inappropriately) named CamPro engine. and is the only Proton model to enjoy significantly more popularity in its export market than domestically. However. Gen-2 (2004) The Proton Gen-2 is the first fully Malaysian-developed (including chassis and engine) Proton car and the replacement model for the Proton Wira. is considered by many to be the best-looking Proton. which at launch was widely criticised for the lack of low. 2004. Attempts to improve this torque deficit by adjusting ECU parameters . The Gen.2 was launched.to mid-range torque (pulling puwer). very low quality of materials and fit and finish of interior components seriously hurt the public's perception of the quality of the vehicle at launch. launched on February 8. due primarily to the popularity of sedan/saloon vehicles in the target market. Introduced in 2002. Proton still continued to sell the Wira after the Gen. It has a minimalist and modern interior with design cues from the Lotus subsidiary.

The car is fitted with an engine and a gearbox sourced from Renault.6 liter sedan is based on the Proton Gen-2 and features a sedan body instead of the Gen-2's hatchback body. It retains the same 82kW Campro engine. making the car as the most fuel-efficient Malaysian car as verified by Malaysian Book of Records.200 cc 5-door supermini car. Proton Savvy recorded the fuel consumption rate of about 24 km/L at constant speed of 90km/h (or about RM0. The Persona is rebadged as the Proton Gen-2 Persona in the UK market. This is because of the use of the European Renault engine. In an official on-road test made by Proton in mid-2006. 2005. Published engine torque curves still show a pronounced dip in torque output in the crucial 2000-3000 RPM engine speed region.08/km of fuel). Proton Persona (2007) The Proton Persona was launched on 15 August 2007. The 1. The 1.have largely been unsuccessful. . presumably due to the missing engine feature. Even with very good fuel efficiency the car maintenance were reportly to be very high even surpassing the Proton Waja. Proton Savvy (2005) The Proton Savvy was launched on June 8.

which is the main staple of its product line. is hardly cutting-edge given today's technology. Proton has limited funds for research and development.CRITICAL ISSUES/ CHALLENGES The Proton badge today does not carry much brand equity. . many of the green engine technologies that are emerging as a result of rising fuel prices and global warming would dictate the direction of automotive development. Many view Proton as a maker of cars that lack excitement but which are relatively cheap compared with Japanese or South Korean makes. On its own. The company needs more desirable models like the Persona. It is of some comfort. which has helped in reviving sales. and would have to maintain its recent improvements in quality as that would have a strong bearing on its acceptance level. Proton also lacks an engine or platform to expand into the SUV and MPV markets. and these are beyond Proton's capabilities. or the 2.0-litre and above segments. And the bulk of its exports are mostly confined to less mature markets. A tie-up with a strong foreign brand will enable Proton to penetrate more discerning markets. therefore. including China and some Gulf Cooperation Council. In the longer term. Proton may need to collaborate with a foreign partner much in the way BMW and PSA Peugeot-Citroen are working together to develop new engines and technologies. Proton's Campro engine. to learn that the Government is still willing to consider a strong strategic foreign partner in the future. But how many foreign stakeholders would be willing to invest the money in Proton to develop new infrastructure and facilities and share their latest technology without being given a substantial or controlling stake in the car maker? That is a matter for the Government to ponder on when the time comes.

The main business activities of the Group encompass vehicle engineering. testing. casting. Exige. The Group also has in its portfolio.MARKETING STRATEGY MARKETING OBJECTIVE PROTON commands a substantial share of the domestic market for passenger cars and over the years has been building up distribution networks in key market centres across the four regions: ‡ South-East Asia. the desirable sporty Satria Neo and the µ2008 Best Model of the Year¶ winner. ‡ the Middle East. Europa and the recently unveiled Evora (which will be available in the first half of 2009) to suit a range of customer demands and preferences. the Group has almost 12. from research. the Group provides comprehensive and versatile consultancy services to many of the world¶s OEMs and Tier 1 suppliers. The Group designs and produces cars for diverse consumer preferences. the fun-to-drive Savvy. ‡ United Kingdom / Western Europe. The Group is also involved in financial services and property management in supporting the main business activities.000 employees who are involved in the whole value chain of the business. T he portfolio of PROTON models includes the reliable family-sedan Waja. Esprit. distribution and after-sales services. the world-renowned Lotus sports cars.2. Through Lotus. development. and ‡ Australasia. manufacturing. the versatile Arena. Currently. the Persona.with models such as Elise. the elegant Perdana V6. The Group conducts research in its centres in Malaysia and the United Kingdom on new technologies to create cars that are unique in both design and driving performance. research & development. the stylish Gen. the proven Saga range. . design. stamping.

Additionally. customer complaints have reduced significantly and quality perception for PROTON products has greatly improved as reflected in the notable improvements in the CPC and DPU levels.machining and assembly to marketing. Towards this end. distribution and after-sales services. Strong customer orientation and competitively priced products are the foundation of our business and essential to our success. On this scoresince the Persona and new Saga were introduced into the market. MARKET SEGMENTATION Quality is about customer satisfaction and meeting customers¶ expectations. a new feedback mechanism called Customer Priority Index (CPI) was introduced with the aim to help drive and resolve quality issues in the market. to say the least. delivery quality defect-per-unit (DPU) and warranty provisions. the key to improving quality in the market is to understand the needs and perceptions of our customers. from the market feedback gauged via warranty provisions and . This is vital in order to establish quick and effective counter-measures to resolve critical quality issues in the market in a timely manner while preventing recurrence of the quality issues in future models. warranty claims and severity of the quality issue. CPI is a matrix that calculates and prioritises customer feedback based on aspects such as technical data. We aim to maintain market leadership by continuing to develop innovative products and satisfy our customers needs better and enhance profitability. It is indeed challenging. During the year under review. The Group also gauged feedback on product quality in the market via indicators such as concerns per car (CPC). the Group established a µVoice of Customer¶ framework to facilitate feedback on quality issues from the market. to improve quality in the market given the ever-changing expectations and quality perception among car buyers today. As such.

This has translated into bookings of almost 70. to say the least.000 in bookings as at end July 2008. .000 units within six months since its launch.Product Quality Report (distributors¶ feedback). Both the Persona and Saga are also expected to contribute significantly to PROTON¶s export sales in the very near future. Entering the market above the Elise. Having invested much time and effort in the three years that are typically required to conceive and develop new models. we have recorded remarkable improvements that reflect PROTON¶s strong commitment to satisfying our customers¶ needs. Within the PROTON Group. the car that remains the embodiment of Malaysia¶s aspirations to be an internationally competitive auto manufacturer. The Persona is the first to embody PROTON¶s philosophy of manufacturing µthe right car for the right market at the right time for the right price¶. MARKET POSITIONING Launch of New Products The engine of growth for any car manufacturer lies in its products. Exige and Europa. PROTON¶s single-minded approach to renew its product line-up to meet the evolving needs and requirements of the buying public resulted in the roll-out of the Persona and subsequently the iconic Saga during the year under review. It is currently the fastest-selling model in PROTON¶s history. The Persona has received over 50. PROTON is indeed pleased to note that the response to date from car owners has been extremely positive. The Persona was followed by the unveiling of the new Saga. The experience and lessons PROTON has garnered over the years have been embedded into this new model. Lotus Group International Limited (³Lotus´) has also unveiled a brand new thoroughbred that is set to take the world of performance cars by storm. The Lotus Evora is the first new Lotus model to be launched in over 13 years.

to prosper and thrive. As indicated in the previous year's report. Algeria and United Kingdom. but must also be committed to carry out long-range initiatives aimed at further strengthening its engineering and manufacturing foundations. This is what will drive sustainable growth for PROTON and positive returns for its shareholders. PROTON has to expand its export potential further. However. the PROTON brand will become increasingly attractive. - Malaysia¶s Proton sets ambitious car export target. Australia. Most certainly the road ahead will be paved with challenges. With its expanded product range. Proton automobiles are available in many countries such as China. PROTON cannot depend solely on the domestic market to grow. Tangible and sustainable growth in the international market will be . but PROTON now has the benefit of experience and is rapidly strengthening the foundation for its future growth. Proton has commanded the local automotive market.this new Lotus will be available in the first half of 2009 and is expected to contribute positively to the Lotus Group. MARKETING STRATEGIES It is imperative that PROTON keeps its focus firmly on the road ahead. Singapore. TARGET MARKETS - Proton is the biggest Malaysian automobile manufacturer. The Group must not only be flexible and adapt to the constantly changing environment. improved quality and value for money product positioning.

Lotus Group International Ltd. There is also large growth potential in this arrangement with Jinhua Youngman. and the Middle East. as well as expanded scope of opportunities in engineering services and technical assistance.the mainstay for PROTON as it aims to expand its market share and sales volume in the export markets.000 units of Gen2 CBU cars over a period of 20 months. this is a significant achievement for PROTON. representing the largest single export order of PROTON cars since its establishment in 1983. particularly in ASEAN. its strategies to grow the brand beyond Malaysian shores are beginning to show progress in terms of sales growth. These cars will be rebadged and sold in the Chinese automotive market under the Europestar brand. Whilst PROTON has already gained a foothold in some markets.PROTON is also expanding its non-manufacturing business by optimising revenue that can be obtained from its Group intellectual property. regards China as an important market and one that it should participate in to be a competitive automotive player in the long run. An example of this strategy can already be seen in the business arrangement entered into between PROTON and Jinhua Youngman. like other automotive manufacturers. the Group is committed towards expanding its regional presence in terms of sales and distribution. The Chinese automotive market in particular. In July 2007. but also enables its subsidiary. both in terms of CBU units to be exported. PROTON. to gain a . For the Malaysian vendor community. India. this will also represent significant additional volume for their manufactured components. licensing of engine and platform. It must now also source components and identify manufacturing facilities that will optimise costs and efficiency. Already. Although the numbers are modest compared to other automotive manufacturers. China. This business arrangement not only enables PROTON to indirectly enter the expanding Chinese automotive market. remains a very important market for many automotive manufacturers. there is a need to explore new emerging markets to tap into. PROTON entered into a business arrangement with Jinhua Youngman Automobile Manufacturing Ltd (Jinhua Youngman) to supply 30. In line with PROTON's 10-year roadmap.

PROTON is also mindful of the need to improve operational efficiency. and the economical Savvy re-designed to give better value proposition to the buyers of the Savvy Lite. at the right price and at the right time¶. PROTON will be launching our first MPV in early 2009. iswara. we have continued to update and refresh our existing product lines to entice and attract customers. pesona. This is reinforced by our winning strategy of introducing µthe right car. we will continue our research and development (R&D) efforts and comprehensive market surveys to gain a . further solidifying our product line-up to include a high quality multi-purpose vehicle that can cater to the family-oriented contemporary lifestyle. particularly with regard to improved capacity utilisation. The re-energised Waja and Gen. savvy.2. Furthermore.strong foothold in the Chinese automotive engineering services market. have successfully managed to excite car consumers in Malaysia during the year under review. MARKETING MIX Product y Proton saga. these two models are performing tremendously well in the market to date. PROTON has identified contract manufacturing for other OEMs interested to enter this region as a possible means to supplement its own manufacturing volumes. with the latter powered by the new CamPro IAFM engine during the year under review and suffice to note. waja. perdana. with their new look and powerful CamPro CPS engine. Towards this end. gen 2. Other exciting offerings are also in the pipeline with replacements for the Waja and iconic Perdana on the drawing board. To sustain this positive momentum. wira. This strategy was reflected in our newly introduced Persona and Saga models. Staying on course. for the right market. The importance of ensuring we have a strong product portfolio is all the more crucial as it has a pivotal impact on our turnaround plans.

colour and alloy rims. Price SATRIA 1. Product Development With robust product planning. better handling and improved quality. body kit.97 . the Gen.5GL (Metallic) WIRA 1.5GLi SE Aeroback Metallic) 42.320.2 was done in tandem with the initiation of the Persona project to take advantage of cost sharing given that both projects share similarities in terms of their interior design.2 is set to become a highly competitive model in the sporty C-segment automotive category. Product Refreshments Gen. By harnessing the right technology and keeping our finger on the pulse of customers¶ requirements.2 now features a new bumper.12 47. as this system has been found to promote better mixing of fuel.2 The face-lift of Gen. the refreshed Gen. followed closely by the unveiling of the new Saga in January 2008.00 50.deeper understanding of the needs of our customer base. The engine¶s Variable Intake Manifold (VIM) switch alternates between a long intake manifold at low engine speeds and a short intake manifold at higher engine speeds. we truly believe that this will bring us closer to achieving our goals of a dynamic product portfolio. The short intake manifold will allow more air to enter faster and be especially beneficial to engines at high Revolutions Per Minute (RPMs).027. We also upgraded parts of the exterior and interior of the car based on customers¶ feedback while introducing the much-anticipated CamPro CPS powertrain.888. As a result of the exterior face-lift. With extra power. marked by the successful launch of the Persona in August 2007. we were able to introduce both new and improved PROTON cars in the year under review. PROTON is applying a longer intake manifold to achieve slower air flow.3GLi SE (Metallic) WIRA Peca 1.

these campaigns included customer-focused initiatives ranging from a 43-point check to discounts for spare parts. 2 years standard manufacturing warranty plus 3 years Extended Warranty.88% for 7 years and 3. Also known as PROTON STAR.114.81 y y y Interest Rate is 3.6L SOCH (Manual) GEN-2 1.455. the Middle East and Indonesia.WAJA 1.94 38.50 106. we re-energised the Saudi Arabian market. .096. which is crucial to our success in the Middle East.3S-LMST (Metallic) 59.500.99% for 9 years.0(A) ISWARA Aeroback 1.88% for 7 years and 3. this investment reflects the importance of the export market in PROTON¶s long-term growth.60 58. Interest Rate is 3. At the same time.6 DOCH Auto (Metallic) PERDANA V6 2.99% for 9 years. focusing primarily on technical support as well as after-sales and customer services. The year also saw the implementation of a special programme for semi knocked-down (SKD) and completely knocked-down (CKD) exports to Iran and China. Towards this end. which are expected to contribute positively towards thenew financial year¶s export volume growth PROTON¶s technical support and after-sales service capabilities must be of high standards in order to further enhance PROTON¶s brand equity in the international market. Promotion The year under review saw PROTON aggressively augmenting the International Sales & Services Division with additional human resources. while expanding our reach in Iran. several µService Campaigns¶ were held during the year under review in our key export markets. In terms of market expansion. Clearly. the Group successfully penetrated into China and Thailand.

422 units compared with 546 units in the previous fiscal year. the company launched the Waja and Neo models in conjunction with the Indonesia International Motor Show 2007.2 Persona in July 2008 and the new Saga before the end of 2008. to enhance our understanding of the markets and provide better response to the customers. During the year. To achieve the anticipated sales increase and improve the after-sales support. Within a short span of time. Place Indonesia Performance and Operations PT Proton Edar Indonesia registered higher sales of 1. Prospects The Indonesian Automotive Industry Association (Gaikindo) had forecasted a steady total industry volume growth over the next three years from 500. In July 2007. Proton Motors (Thailand) Limited. the Company has expanded its network by an additional four branches and five dealers. PROTON managed to successfully penetrate the Thai market with sales of its cars exceeding 1200 units within the first six months of its launch.000 in 2010.Naturally. these campaigns are ideal platforms to bring PROTON closer to the international customer base. . Thailand Performance and Operations PROTON made its entry into Thailand on 30 January 2008 through its wholly-owned subsidiary. Since making in-roads into the Thai market. The Company is expected to perform better in the next financial year with the launching of the Gen. there was also a marked increase in the frequency of visits by both the sales and technical teams to the various countries in which PROTON has presence.000 units in 2008 to 600.

PROTON captured 1. On another note. Neo and Persona. coupled with the introduction of China-made cars led to a 43% reduction of brands operating in our segment.1% in 2007. The year also saw the introduction of Chinamade cars into Singapore. Prospects For financial year 2008/09. Gen. The reduction in quota. the PROTON Persona launched in October 2007 received encouraging response and drew accolades from both thepress and customers. Currently. This reduction signaled the end of bumper quotas in the island state and resulted in distributors reducing their margins to clear outstanding stock. as banks were more cautious in lending money. Singapore Performance and Operations The Certificate of Entitlement quota for cars in Singapore was lower by 3. the overall UK total . a number of initiatives are in the pipeline to increase our operational efficiency here. United Kingdom Overview Contrary to concerns surrounding the automotive industry. PROTON aims to achieve sales of 4000 units through the sale of various models including the Savvy. 80% of cars in Singapore are less than four years old while 90% are less than five years.3% of the market share in the passenger car segment and was ranked 8th overall. Sales were also further affected by the increased petrol prices and tightening of credit due to the sub-prime fall-out in the US.2. Prospects Given the market conditions in Singapore.

and is forecasted to sustain its momentum. while high tax band CO2 vehicle salesdropped by 17%.5% and 3. Given these market conditions. which bodes well for the brand in the long term.400.000 sales. sales for Waja were impacted due to a drop in demand throughout the segment while the Savvy faced severe competition from other brands in its category. Sales of low CO2 tax band vehicles rose by 15%.industry volume (TIV) in 2007 increased by approximately 2. which was launched in March 2007. With regards to body types. Proton Cars (UK) Ltd saw a reduction in sales by 8% during the year under review.2 model improved during the year and the S atria. while private buyer sales were static. retail sales increased by 3. The increase was due to the business and fleet sectors where sales rose by 5. a slow-down in the housing market and rising cost of living. Sales of diesel cars continued to rise. However.5% to reflect over 2.3% respectively. usurping sales from the more traditional three. Nevertheless. One of the key topics that took centre-stage in 2007 was the µgreen issue¶ which influenced the perception of the UK buying public. was well-received by dealers. Sales of µgreen¶ cars were spearheaded by both the Government through vehicle taxation and manufacturers of highly fuel-efficient and low CO2 emission vehicles marketing its benefits. Prospects In the second half of 2007 and early 2008. The year 2007 also saw the top ten market leaders focusing on private buyers with all of them seeing a substantial rise in sales. motoring press and the general public. contributing only 43% of the total market share. Sales of the Gen.5% during the period. four and five-door segments. the only significant growth came from MPVs which rose by over 16%. capturing over 44% of market share by end-2007. the operating environment in the UK became more challenging with higher interest rates. . Proton Cars (UK) is adopting a number of initiatives which will lower operating costs. despite reduced marketing expenditure. while maintaining a high level of support for our dealer network and customers. now accounting for over 70% of the entire UK volume between them. Performance and Operations Overall.

Australia Overview The total Australian vehicle sales grew by 9.1% and reached a record 1. However. Prospects Automotive sales in the coming financial year are expected to ease slightly on the back of rising interest rates. . Performance and Operations The positive financial results were due to improved Lotus vehicle sales and reduced operational costs by Proton Cars Australia.9% respectively whilst PROTON¶s retail sales increased by 16%.2 are expected to boost volume by 22% in the new financial year. On top of this. The strong focus on these two key areas is expected to result in increased revenue and better operational returns. high fuel prices are projected to shift customers¶ preference to more fuel-efficient models which could translate to increased sales in the small and light vehicle segments. In addition. the launch of Persona in May 2008 and the subsequent release of the face-lift Gen. Proton Cars Australia successfully increased its dealer network to 41 dealers nationally during this period. grew by 10. the company also managed to increase retail sales during the financial year in the face of heavy discounting by its main competitors. The small and light segments. all main regions throughout Australia are covered. Currently. Sales of smaller fuel-efficient vehicles accounted for the majority of the increase due to the increasing price of oil and rising interest rates. Sales of the Savvy and Jumbuck also improved significantly towards the end of the year under review as a result of several innovative marketing campaigns. The current shift of sales towards smaller vehicles is expected to continue as fuel prices continue to rise and the economy slows down.049 million units. which PROTON competes in. The Savvy in Australia. The number of dealers is also estimated to increase slightly.2% and 5. Proton Cars Australia will be implementing an aggressive rationalisation programme to improve dealer throughput and increase the yield in under-performing regions. However.

Once a car has been surrendered to Proton under the scheme it will be de-registered from the Road Transport Department and scrapped.000 and so far up to 2. even if it is a Perodua or Proton. Proton was looking . anyone who scraps their cars which are older than 10 years will receive a RM5000 discount to buy a new car. registered and roadworthy can be traded in for RM 5. The launch of the quality campaign was based on the commitment of ensuring all Proton cars were free of defects.CONTROLS/ACTION PLAN Implementation Strategic Implementation Plan Auto-scrapping Scheme Proton already has a scrapping scheme running since the year 2007 called Proton XChange where old cars over 10 years old and owned by the owner for at least 6 months. The scheme will help proton to improve sales amid unfavorable consumer sentiment due to employment market uncertainties and could help boost car sales and rejuvenate the local automotive industry. Beside that. It is going down to the core of the problem and evaluating its product range and it¶s suppliers to weed out the quality control issues. and is to get rid of the negative perception of brand image. Proton had always emphasized quality control in all aspects of its operations but it was now drawing on lessons from the past to ensure current levels of quality control were stepped up.700 of such discounts have been issued. but only a new Proton. Quality Control Campaign Quality Control campaign would address employees. It wants to reverse this negative perception that Malaysians have on its cars. There is also zero incentive for those looking at a newer second hand car. production practices and components manufactured by it¶s suppliers to make improvements to Proton quality. Proton had recently established a monitoring system to identify defects on the production line to respond faster to problems of defective components.

The high number of bookings for the Persona and Saga to date is reflective of growing customer confidence with regards to Proton's new commitment to quality. With the recent fuel hike.to further tap the markets in Asian. product and profit and need to be prepared to compete globally. Nissan sales in January 2009 came in strong with a 17% increase in volume to 2.800cc). Proton Exora.0% compared to the same month last year. proton believe Exora will give a serious challenge to Toyata Avanza (maximum price: RM72000 for 1. At this current price. Proton also plans to fit all models with natural gas tanks from October to help motorists beat the rising cost of fuel.285 units while its total industry value has dipped by 5. while Toyota recorded a more worrying contraction of 41% in January sales.500cc) and the Nissan Grand Livina (maximum price: RM97000 for 1. Proton registered a 4% decline in sales to 9874 units last month. Perodua posted a 5 % decline to 9874 units. Proton wants to focus on rebuilding the company. Car manufacturers were keeping mum on their new launches perhaps due to the fear of weak response as the economic outlook continued to look challenging. Proton's maiden multi-purpose vehicle (MPV) Despite the economic slowdown. India and the Middle East. China.600cc engine. The focus is putting Proton on a better footing. to improve quality. The company will further tighten production controls and conduct audits before cars are rolled out to ensure that there are no rattles and squeaks any more. to be powered by a 1. . 'Zero-Defect' Campaign Proton launched a 'zero-defect' campaign aimed at erasing a reputation for poor quality that has left it struggling to compete against foreign competitors. On the other hand. would be priced below RM80000. Proton's maiden multi-purpose vehicle (MPV) slated to be launched in April 2009 is expected to give a serious challenge to other comparable MPVs due to its competitive pricing and value for money. consumers want quality cars and they have high expectations.

announced under the second economic stimulus package tabled today. The scheme was also an important tool in the automotive industry¶s environment management. Once surrendered. Proton need every bit of help from the Government during this difficult period to ensure its survival as close to 200.Contingency Plan The global and local automotive industries are facing one of the most challenging periods in recent history with buyers being cautious amid the global economic crisis. France and Italy. The government today announced that it will assist in the auto-scrapping scheme for Proton and Perodua.000 people are directly and indirectly linked to the automotive industry nationwide. was timely and would positively impact the industry. Malaysia will follow the footsteps of other countries like Spain. . The government¶s plan. the car cannot be returned. The UK (is also) contemplating the implementation of such a scheme in the near future to spur car sales. It could help the industry to dispose old cars more efficiently and responsibly whilst protecting the environment.

com/images/attachpic/g4/B400/B400F1844T909_8195ded601b2dd2aa ee71cb07bd4c006.proton.proton.pdf ANNUAL REPORT PROTON 2006 http://www.proton.com/public/media/mediacentre/documents/annualreports/AReport_2002 _Full.pdf ANNUAL REPORT PROTON 2003 http://www.pdf ANNUAL REPORT PROTON 2002 http://www.proton.buildboard.com/public/media/mediacentre/documents/annualreports/AReport_2007 .proton.pdf ANNUAL REPORT PROTON 2005 http://www.com/public/media/mediacentre/documents/annualreports/AReport_2003 _Full.pdf ANNUAL REPORT PROTON 2007 http://www.Bibiolografi Analysis SWOT Proton http://g4.pdf ANNUAL REPORT PROTON 2008 http://www.proton.com/public/media/mediacentre/documents/annualreports/AReport_2008 .com/public/media/mediacentre/documents/annualreports/AReport_2006 .com/public/media/mediacentre/documents/annualreports/AReport_2005 _Full.pdf .

ChAerles W.com.Hair.%20Company%20Focus/By%20Co .com/2008/05/26235421/Malaysia8217s -Proton-back-i.wikipedia.Lamb and F.(2008).strategy marketing Carl McDaniel. the free encyclopedia http://en.com.my/indeotx.org/wiki/List_of_Proton_car_models Malaysia¶s Proton back in profit on higher sales http://www. introduction to Marketing (9th edition).com/public/media/mediacentre/documents/annualreports/AReport_2008 _5. Jr.proton.einvest.livemint.html Proton Edar http://www.wikipedia.proton.asp Proton Holding http://www.sg/160407.Thomos South-Western Financial Statement 2008 annual report http://www.com/about-us.org/wiki/Marketing_plan Promotion of Proton http://www.my/ArchiveCompanyFocus/1.pdf List of Proton car models.com. http://en.html Malaysia¶s Proton sets ambitious car export target http://in.com/article/companyNews/idINBKK21192820070927?pageNumber=2&vi rtualBrandChannel=0 Marketing plan From Wikipedia.proton-edar.Chapter 2.proton2020.php Proton and Lotus Top the Aussie Vehicle Sales Growth Charts http://www.reuters.

pd f .mpany%20Name/Counter%20Name%20M%20-%20Z/Proton%2020041006.

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