Turning around a National Icon (Part 3)

In 1994, Mazda launched the 8th Generation 323/Familia range. The company has always been well-known for its unorthodox behavior in the industry. The rotary engine, an engineering marvel with German parentage, survived its difficult birth and grew to adulthood thanks to the unwavering care of its Japanese step-parent. Their styling of their vehicles was also light years ahead of their peers.

However, this launch bordered on madness; there were two 4-door sedans, two 3-door hatchbacks and one 5-door hatchback. That does not include the styling changes or variations applied to models in the US, EU and Asian markets. Worse, they built them on 2 different platforms (BH and BA, the latter being almost identical to CB). The powertrain options were much worse and read like a hotel buffet list. Predictably, financial disaster was just around the corner, and Ford swiftly moved in and took a controlling shareholding of this troubled company in 1996.

The situation resonates with Proton today. Once Ford took over, it was obvious that they had to decide what to do with all the models; some of them had to be scrapped to consolidate the sales number to ensure survival of a few. They might just be able to achieve breakeven for this generation of 323s, but it was highly unlikely. In 1998, under the guidance of Henry Wallace, arguably the most boring generation of Mazdas were born, until Mark Fields took over the reign in 1999 and gave birth to the Mazda6 in 2002, heralding the rebirth of the brand, Mazda3 and the iconic RX-8 in 2003.

As mentioned, in order for Proton to achieve decent economy of scale, the current and upcoming models must take into consideration of leveraging on the export markets. It is important to bear in mind that having more models is not the solution to sales problem as demonstrated by the Mazda 323 experience. To sell cars and remain profitable in the long run, having a sustainable and profitable dealership network comes first. Otherwise, it will be a zero-sum game for all. Having more models mean the dealers having to invest more into special tools, stocking up on more parts and therefore tying up cash flow. This may end up as losses incurred due to slow-moving and redundant parts on top of additional rental for storage of such inventory.

Proton currently have 6 in-house models, namely: Saga, Iriz, Persona, Prevé, Suprima and Exora build on 3 different platforms. The new Saga and Persona (both launched in 2016) adopted the powertrain and other parts and components from the Iriz (2014). Prevé (2012) and Suprima (2013), are developed on the enhanced Exora (2009) P2 platform. This trio shares probably the most parts and components after the Iriz and Persona duo. These 5 models, with the exception of Saga, are qualified or expected to qualify for 4-5 Stars on ANCAP, which makes them attractive to be exported to most countries in the world. However, all the P2 models are due for a major facelift with the Exora way overdue for a FMC (Full Model Change). This is the perfect timing for Geely to develop their RHD models utilizing the new CMA platform.

The Boyue, due to be launched in 2019, will herald in a new age of Proton models and powertrain to replace the P2 models. These models must take into consideration the stringent EU emissions law due to kick in in 2020 which will necessitate the introduction of PHEVs and EVs in the model line-up. Proton still have the best chance of success in the UK and Australian markets because these are truly open markets where the same rules apply to everyone. Thailand and Indonesia have implemented local tariffs and incentives to deter the invasion of imported vehicles via their Ecocar and LCGC program. As such, it is pointless for Proton going head-on with the local Goliaths; it would be best to dominate a niche segment with healthy numbers in such markets, much like Subaru.

Thailand: With the weakening of the Malaysian Ringgit, the selling price of the Toyota Vios and Honda City is now on par with the Malaysian market, meaning the Proton Persona is now able to be priced at a level that is attractive to the Thais as an alternative to the Japanese. With a CNG option, Proton should be able to move metal at healthy numbers like the old Persona did. However, the VVT engine on the Iriz and Persona needs to be updated to meet Thai standards, which is unique in the world: EURO IV with OBD.

Indonesia: This is predominantly a 2-box vehicle market. For the last few decades, MPVs have been the dominant body type. Unfortunately the new MPV from Proton is a rebadged Suzuki Ertiga which is only meant for domestic sales. Also learning from their own first-hand experience, Geely would know that being the cheapest does not necessarily mean more sales. Proton and Geely would not be able to penetrate the LCGC segment thus it would be best to direct focus to B-hatchbacks and C/D-MPVs offering features that are not available in local competitor models currently.

UK and Australia: Both the B and C-segments are popular. With the proper powertrain, the Iriz, Persona, Prevé and Suprima will be in a position to capture some market share from the mainstream players. Geely should begin the FMC development for Exora, Prevé and Suprima based on the Boyue platform soon. With an EV model thrown into the mix, coupled with the SUV, Proton will be in a strong position to return to these markets and launch with a bang.

By 2020, the Saga, Iriz and Persona should be retired leaving only the replacement of the Prevé, Suprima, Exora and Boyue in the Proton model line-up to fill up the gaps with powertrain options ranging from 1.2-1.8L. In other words, the real push for the revival of Proton can only take place in 2020, much like how Mazda did after 6 years under the stewardship of Ford. In the case of Proton, this is expected to be achieved within 3 years.

Whether any of these will emerge over the next 3 years is still a mystery, but this would probably be the most logical path to embark on so that the partnership of Geely-Proton is able to bear fruit via platform-sharing in the shortest period of time, similar to what VW did with Skoda and SEAT.

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