Turning around a National Icon (Part 2)

There are a number of marketing principles that all businesses must subscribe to. In the case of the auto industry, the sales and service network would rank at the top, because no matter how good a product is, how enticing the ad campaign may be, when an interested customer is unable to see, touch and feel a car, with the assurance that he or she will be well taken care of, the chances of success will reduce significantly. 

Some industry friends have argued about the real value of Proton to Geely. While many have suggested the more commonly-known assets, most have missed out the real jewel, and that is Proton’s overseas sales and service network. 

Admittedly, Proton overseas sales is currently a pale form of its former glory, but at their peak:

? Sold more than 20,000 cars a year in the UK

? Won JD Power customer satisfaction awards in the UK

? More than 80 dealers throughout the entire UK

? Sold more than 4,000 cars a year in Australia

? More than 30 dealers throughout the entire Australian continent

? Sold more than 5,000 cars a year in Thailand

? Sold more than 3,000 cars a year in Indonesia

While Geely have exported more cars globally than Proton ever did, they have not been able to penetrate certain markets that Proton have successfully done so since 1987. Take UK for instance. While there were reports stating Geely is planning to launch their models there in 2012, it didn’t materialize. Over the last few years, Geely exported around 20,000 cars annually; that essentially is what Proton achieved with a single European market in the 90s. 

In Australia, via the John Hughes Group, Geely landed in Western Australia in 2011 and have bragging rights for being the cheapest car in its class at AUD8,999. More often than not, Chinese car brands have found it tough to penetrate overseas, especially developed, markets. In 2016, only 2,628 Chinese passenger cars and trucks were sold in Australia, which is less than what Proton was selling at its peak. This is obviously due to the perception that Chinese cars are of low quality but it is only a matter of time that this will change too, just like how Hyundai started with the infamous Pony.

Closer to home, Proton entered Thailand and Indonesia in the mid-2000s. Bear in mind that these are the strongholds of the Japanese manufacturers with significant local investments, Proton managed to sell a respectable number of cars in these challenging markets with the help from strong local partners. Geely have yet to penetrate the Thailand market while in Indonesia, although having constructed a CKD plant there in 2013, sales have almost ground to a halt in the last few years. 

Proton’s inability to continue exporting to the UK and Australia was due to the change in the emissions and technical standards in these 2 countries. While theoretically sales could have continued under the small series classification, there is no escaping from the penalty slapped on both the manufacturer and consumer, thus rendering it an unattractive proposition. Worse, upcoming CO2 emissions regulations will require compulsory sales of EVs in the product line-up in the near future. The same is applicable to Thailand where excise duty is now determined by CO2 emission levels. This is where Geely will play a critical role in reviving the existing network with their latest powertrain technology which Proton is lacking currently. 

Geely could theoretically add an additional 30,000 annual sales to their Group portfolio within 2-3 years via the existing Proton overseas sales and service network with the potential to grow even further by focusing on marketing efforts to grow these 4 RHD markets. This will help Proton achieve the target sales volume based on the product life cycle. A higher economy of scale translates also to cheaper parts and components thereby reducing the ownership cost, which will make it an attractive selling point to the mass market owners. 

Geely could potentially use this as a springboard to launch the new Lynk & Co brand by leveraging on the existing Proton dealership network by extension. This will ensure a win-win situation for all in the eco-system and a feasible quick-to-market strategy to adopt.

(The opinions expressed in this article are the author's own and do not reflect the view of any legal entity, real or imagined.)