Buoyed by X70’s success, DRB-HICOM eyes emerging markets, says MD

Azril Annuar
Prime Minister Tun Dr Mahathir Mohamad and his wife, Tun Dr Siti Hasmah Mohd Ali, during the official launch of the Proton X70 in the Grand Ballroom, KL Convention Centre, December 12, 2018. — Picture by Shafwan Zaidon

MELAKA, April 11 — DRB-Hicom is confident that it is heading out of the woods as its subsidiary and national carmaker, Proton Holdings Bhd, has shown signs of making a recovery with its new line of sports utility vehicle (SUV), the Proton X70.

The conglomerate’s managing director Datuk Seri Syed Faisal Albar told the media yesterday that the joint venture with China automotive giant Zhejiang Geely Holding Group Co Ltd (Geely) has proven worthwhile for Proton with the sale of more than 20,000 Proton X70 units.

“We track the booking as well as the registration. Booking is more than 20,000 so far. What we track is from day one.

“Out of the over 20,000 units registered, 10,000 have already been delivered. Sabah and Sarawak have seen a total of 10 per cent of our sales, around 1,000 units so far,” he said.

When asked if its shareholders can breathe a sigh of relief, he admitted that DRB-Hicom was still in choppy waters but believed that with Proton showing signs of turning around, the group will be in better health soon.

At the same time, Geely’s backing has generated greater banking confidence in Proton.

“So far a lot of the investments have been through bank borrowings. After the X70 launched, banks’ confidence level was higher. Before they said (Proton was) high risk.

“Now with Geely and their capability with Proton together, as well as (producing) good products, bank confidence is higher and most of our investments is made via bank borrowings,” he said.

Syed Faisal is aiming for Proton to be the top car manufacturer in the nation with a 30 per cent control of the market share and one of the top three in Asean with a 10 per cent control of the regional market.

He also said he wants to make Proton profitable as soon as it is “practical”.

Part of his plans include a makeover for Proton showrooms and service centres and improving the amenities provided.

Giving Honda showrooms as an example, Syed Faisal said his rival’s showrooms have cafes and magazine racks to provide a better customer experience to match the products being sold.

“We are also looking at progressive localisation. What we have mentioned to the government is increase technology of localisation. We need to optimise the plant capacity (in Tanjung Malim).

“We have Shah Alam and Tanjung Malim (plants). It is not economical to have two sites if we are producing (only) 70,000 to 80,000 cars a year. So this is why we will shut down our Shah Alam plant and move our full operations to Tanjung Malim’s Proton City,” he said.

Touching on Proton’s expansion into Pakistan, Syed Faisal explained that a shift in global strategy is required.

Instead of manufacturing the vehicles locally and then shipping it out into the international market, Proton plans on developing assembly lines in promising markets, including Pakistan and possibly Egypt.

“Over the years Proton did not make money in overseas market.

“The shift in strategy is this, we want to go into countries where the market has potential upside and with that we want to actually start an assembly in that particular market rather than just sending CBUs and then appoint dealers, that one I think over the years it will not hack it anymore.

“The advantage of creating an assembly in local market like Pakistan, the local government will be excited to support because we create jobs for the local market and we can get better incentive from the government,” said Syed Faisal.

Observing that the motorisation rate in Pakistan is low, with 17 cars per 1,000 population, he added this was the rational behind his entry plan into the new market.

He added that the same motorisation rate is applicable in Egypt and the company is currently studying the new market. Another positive prospect behind Egypt is that it could serve as an entry point into its neighbouring nation if there is an assembly line there.

On a related matter, Syed Faisal also hinted that the group’s automotive assembly production company Hicom Automotive Manufacturers Sdn Bhd might be producing two new car brands from its assembly line in Pekan.

However, he said he could not reveal anything more than that when pressed.

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