Proton Case Study

Topics: Automobile, Mitsubishi Motors, Proton Pages: 8 (2527 words) Published: January 13, 2012
Proton Case Writing
About Proton
Perusahan Otomobil Nasional Berhad (Proton) was established in May 1983 with the idea of creating Malaysia’s national car (Proton, 2011). In July two years later, in collaboration with their Japanese counterparts from Mitsubishi Motors Corporation, Malaysia’s first car was produced. Mitsubishi provided Proton with technical assistance and supplied core components such as basic car designs, engines and transmissions (Proton, 2011). Many of the models (past and present) bore great similarity and resemblance to Mitsubishi’s fleet, and in fact had been dubbed as Mitsubishi clones (Wan, 2011). Although investment interest from Mitsubishi ceased in 2004 when it sold the 15.86% of Proton shares it held (Lopez, 2004), they are still very much in collaboration today. This strong alliance, which has been forged for almost three decades, sees Proton continually using Mitsubishi prototypes in their models. In return, Mitsubishi takes Proton models and markets them as its own in certain markets (Singh and Yap, 2008). In addition, both carmakers are working on a joint venture to develop a small hatchback car that is both space and fuel efficient (Singh and Yap, 2008). Both firms benefit from transfer of technology, improved product line-up and reduced costs. Although Proton used Mitsubishi engines in its early days, it has moved towards independence. Proton’s reduced reliance on their Japanese counterparts came after the acquisition of the ailing British sports carmaker, Lotus Group (Proton, 2011). Since the takeover in 1997, Lotus has improved Proton’s technical and engineering capabilities. Besides gaining insights to improving its production processes, Proton successfully developed its first automotive engine with the aid of Lotus. The sportier designs and improved capabilities of their newer models saw Proton draw more attention and appeal. R&D, Production and Domestic Sales

The integration of Lotus also saw a team of personnel permanently based at their Research and Development (R&D) facilities in Malaysia (Proton UK, 2011). The strong emphasis on R&D saw Proton spend a hefty RM318 million (USD102 million) on various development projects such as the development of hybrid and turbocharged engines (Proton Annual Report, 2011). Of this R&D expenditure, RM298 million (94%) came through a government grant supporting research in Green Technology (Proton Annual Report, 2011). Besides its engine development, Proton actively engages in R&D for its entire production process, from clay modelling to vehicle testing, as shown in Figure 1. Every detail of a car, from its material to its emission and noise levels are tested (Proton, 2011). Two of Proton’s core values, Quality and Innovation, further indicate its dedication to spearhead the automotive industry by constantly upgrading its skills and technology through R&D (Proton Annual Report, 2011). More significantly, although the development of a completely new vehicle from initial concept stage to the production of a road-worthy model usually takes 36 months, Proton’s R&D efforts successfully reduced this to a mere 24 months (Proton, 2011). Proton currently manufactures and assembles a range of ten passenger vehicles from two of its manufacturing plants in Malaysia. Shah Alam, its first plant, and Tanjung Malim, its latest state-of-the-art facility has a combined capacity of 350,000 units annually (Proton Annual Report, 2011). In FY 2011, Proton produced 186,769 units (Proton Annual Report, 2011), accounting for a mere 53.4% of its capacity. Of this figure, 162, 012 units (86.7%) went to the domestic market (Proton Annual Report, 2011). Proton, being one of two local manufacturers, is ranked second in terms of its 26% market share, shy of the 31.7% held by domestic competitor Perodua (Wong, 2010). Proton Worldwide

Proton, in spite of exporting only 13.3% of its production, has spanned its presence spaning across 25 countries (Proton, 2011). A majority of...

References: Ashari H, Sim SKL, Teh CB, 2010. Product: Proton Exora 2, University of Malaya Faculty of Business and Accountancy, < >, Accessed 8th October 2011.
Department of Statistic, Malaysia, 2011, <>, Accessed 25th Oct 2011.
Joyce.D, Dermot.G and Martin.S, 2007, Vehicle Ownership and Income Growth, Worldwide, , Accessed 25th Oct 2011.
Lopez L, 2004, Mitsubishi Sells Proton Shares, The Wall Street Journal, , Accessed 18th Oct 2011.
Proton Annual Report, 2011, Annual Reports, , Accessed 18th Oct 2011.
Proton Malaysia, 2011, Corporate, , Accessed 18th Oct 2011.
Proton UK, 2011, Lotus Engineering, , Accessed 18th Oct 2011.
Singh J S and Yap D, 2008, Proton in Collaboration with Mitsubishi, , Accessed 18th Oct 2011.
Syed A R, 2011, Brand Watch: Proton After 25 Years, Dinar Standard, , Accessed 18th Oct 2011.
Wan M, 2011, Proton, Autozine, , Accessed 18th Oct 2011.
Wong J, 2010, Perodua Strenghtens Market Leadership, Wemotor, , Accessed 18th Oct 2011.
Figure 1:
Proton, 2011, R&D Facilities, , Accessed 18th Oct 2011.
Figure 2:
Motor Trader, 2011, Market Report for 2010, , Accessed 25th Oct 2011
Figure 3:
Motor Trader, 2011, 2011 Market Report for Malaysia, , Accessed 25th Oct 2011.
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