Published on September 9th, 2017 | by Daniel Sherman Fernandez0
Will Geely Retire Proton or NOT?
Geely has shown a true interest to buy 49.9% of Proton (the purchase confirmation is around the corner). Now comes the hard part. Having secured ownership of Proton, will Geely be able to turn Proton around and win back market share or is Geely planning to slowly retire Proton?
Let us look at the possibility of Proton being retired slowly by Geely. Yes, we know that a joint venture SUV is planned with Geely’s current Boyue SUV. Geely will produce the JV Proton SUV for Malaysians and probably neighboring Thailand and Indonesia. Both Thailand and Indonesia have growing auto markets and they love their SUV’s.
This might just be some icing on the cake. The real deal we think is to bring Geely’s product range to Malaysia and assemble them for Vietnam and Cambodia which are left hand drive markets. Meanwhile, there is the fast growing left hand drive Philippines auto market which is great consumer of SUV’s and MPV’s.
Japanese car brands like Toyota, Honda, Nissan, Daihatsu, Mazda and Suzuki currently dominate the Southeast Asia’s car markets. In the late 1970s when rising petroleum prices forced British, Italian and French car makers to retreat from the region, the Japanese car brands led by Toyota and Honda took 90% of the region’s annual car sales easily.
In Indonesia alone, Southeast Asia’s largest market, Japanese car brands have taken a large share of the car market (95%), which is higher than their share in their very own backyard, Japan. This is why Thailand, Indonesia, the Philippines, Vietnam and Malaysia have been called “Japan’s backyard.”
By buying Proton, Geely now gets an easy entry into the ASEAN car market and with all the import and tax incentives in place for vehicles produced in ASEAN, Geely has an easy price entry into the fastest growing car markets. Proton’s Tanjung Malim factory and plant employees need not worry as there will plenty of work and capacity will probably be increased to cater to regional demand.
The only worry will be the probable demise of the Iriz, Saga, Preve, Exora and Suprima. These models will easily be replaced by Geely’s lineup of cars like the GC9 sedan and GC2 hatchback.
Also not forgetting the demise of some Proton parts vendors who have been enjoying great profits at the expense of Proton customers and the Malaysian tax payer.