Issues with Proton

IT is no secret that the end in talks between Proton and Vollkswagen on a possible alliance comes on the heels of recent improvements in the fortunes of the national carmaker.

After five consecutive quarters of losses, sales by Proton, led by managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir, have taken a turn for the better.

Syed Zainal has held the reins for some two years and has instituted a host of reforms, addressing many of the quality control issues, and vendor and marketing problems faced by Proton in the past.

Take a look at the latest Proton Persona and you will get a glimpse of some of the changes - more uniform panel lines, better interior plastics and seating, a more responsive transmission, and a more inviting interior, among others.

Proton Edar dealers are now said to be registering average sales of 35 cars each, or a total average of 11,000 units per month, which translates into a 300% increase in the third quarter of the year compared with the first quarter.

But there are many areas that Proton needs to address.

The Proton badge today does not carry much brand equity. Many view Proton as a maker of cars that lack excitement but which are relatively cheap compared with Japanese or South Korean makes.

The company needs more desirable models like the Persona, 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's Campro engine, which is the main staple of its product line, is hardly cutting-edge given today's technology.

Proton also lacks an engine or platform to expand into the SUV and MPV markets, or the 2.0-litre and above segments. 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.

In the longer term, many of the green engine technologies that are emerging as a result of rising fuel...