A couple of months ago, it was reported that Proton’s vendors were facing “severe financial strain” due to the national carmaker failing to honour the number of parts it ordered for its SUV models – the X50, X70 and X90. We raised this issue during a Q&A session after yesterday’s media briefing, and the company’s deputy CEO Roslan Abdullah stepped in to give his comments on the situation.
Roslan said the problem stemmed from an unexpected slowing of sales due to the influx of new competitors from China, particularly Chery. “The [current] situation, with competitors coming into the same product [segment], their price gap not more than RM5,000, impacts our [ability] to honour [orders].
“When we planned [our production] for the X50 in 2020, for example, the [Honda] HR-V was the only competitor. But as of now, I think some of you just came back from China [after Auto China 2024 in Beijing], you know how many cars will come and [take a piece of the pie],” he said, adding that Proton was adjusting production to clear outstanding stock, hence the reduction in orders.
A different take was offered by director of manufacturing Mohd Shaharuddin, who said that Proton has a rule of committing to one month of full orders and five months of forecast orders, with a fluctuation not exceeding five per cent each month.
However, the most recent issue with not honouring orders was not caused by Proton not wanting to build the cars, but certain suppliers not being able to produce the parts and holding up the supply chain. “We have 127 suppliers, but three major suppliers cannot deliver the parts, so definitely we cannot produce the cars,” he said. “For the past three months this is what has been happening.”
As for complaints that Proton was sourcing more components from China at the expense of local vendors, Roslan said the issue, as always, came down to cost – implying that Chinese-made components are cheaper. “When we put anything with the Proton logo, customers expect it to be cheaper than the rest. So what choice do we have in order for us meet customers’ expectations?”
He added that Proton has requested its local vendors to focus on reducing prices to enable its vehicles to be sold at prices that met expectations. “We can just say, “OK, when the [vendors] increase the price, we just increase the car price.” And yes, we can get a higher profit per unit, but can we go for Malaysia #1 or ASEAN #3 [in terms of sales numbers]? That’s the question [we ask ourselves].
“In spite of that, being a Malaysian company, we always focus on the Malaysian vendors to develop and focus on achieving better cost effectiveness,” Roslan remarked.
Proton will surely be hoping that the product refreshes coming to its ageing SUV models – including a facelifted X70 due this year – will reverse its fortunes and bring sales back to “normal” levels. In the meantime, vendors will just have to hold out a little bit longer.
The post Proton vendor issues due to slow SUV sales caused by Chinese rivals – reduce production to clear stock appeared first on Paul Tan's Automotive News.
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