07-09-2007: Proton to continue reducing dealer network
SHAH ALAM: Proton Holdings Bhd, in a move to boost earnings, plans to slash its current 310-dealer network to as low as 200 by end-2008, and introduce new models besides targeting higher exports to high-growth emerging markets like China and Indonesia.
The national carmaker is now taking these measures to arrest declining earnings, realign some of its offerings to target the broader market segment and drop dealers that failed to perform after having lost significant market share in recent years.
Speaking to reporters after its AGM yesterday, Proton managing director Datuk Syed Zainal Abidin Mohamed Tahir said the distribution rationalisation would include identifying areas with oversized dealer network.
“When we first started last year, there were about 400 outlets, both between EON and EDAR. Today we stand about 310 but it is not the right size yet.
“We will continue with our rationalisation, and in fact, we want each and every one of our dealers to perform. Subject to their performance we will manage them properly and if they perform they will be with us. If not, they have to give up,” he said.
Syed Zainal said the national carmaker was also realigning itself to introduce products of mass appeal to capture loss ground, adding that its latest model Persona and the planned Iswara replacement model slated to hit the market next January were for the broader market segment.
“Going forward, we will be very mindful about product positioning, and we will try to produce models of various derivatives on selective platforms. We want to have more carry-over from existing components.
Proton chairman Datuk Mohammed Azlan Hashim said the growth of the company hinged on higher revenue from its domestic and international sales, adding that the encouraging bookings for the Persona as well as the deal to supply 30,000 units of Gen2 CBU cars to China were an early indication of the revival of Proton’s flagging fortunes.
“With 13,500 bookings and 1,200 registrations for the Persona in less than a month after its launch last month, the Persona is shaping out to be a positive addition to our product portfolio.
“In China, production for the Gen2 to be sold under the brand name Europestar will start next month for 500 units and sales are expected to commence in December. Although the total number of cars under this deal is modest, this is a massive achievement for Proton as it represents our single largest export order ever,” he said.
Azlan said there was immense potential for Proton vehicles to notch higher sales in Indonesia, and a better prospect of penetrating the Thai market, especially with the recent relaxation of import duties there.
On the ongoing negotiations with German carmaker Volkswagen AG to form a strategic alliance, he said: “At this juncture, there are no facts and figures available to be confirmed. Clearly, we will work very closely with the government and the parties involved.
“We want to be involved comprehensively because we expect to achieve benefits and reap values that include access to product range, access to market and access to technology.”
On Proton’s move to reduce its dealers, Proton Edar Dealers’ Association president Wan Ahmad Sepwan said: “If Proton car sales volume in total per month is 14,000 units, there should not be any issue with 310 dealers. However sales over the last year have been very low, but last month it was an encouraging 12,000 units, especially with the Persona model coming along.
“It would be ideal to have 250 dealers, as it would mean you have the best performers and they in turn receive good returns for their efforts.”
The national carmaker is now taking these measures to arrest declining earnings, realign some of its offerings to target the broader market segment and drop dealers that failed to perform after having lost significant market share in recent years.
Speaking to reporters after its AGM yesterday, Proton managing director Datuk Syed Zainal Abidin Mohamed Tahir said the distribution rationalisation would include identifying areas with oversized dealer network.
“When we first started last year, there were about 400 outlets, both between EON and EDAR. Today we stand about 310 but it is not the right size yet.
“We will continue with our rationalisation, and in fact, we want each and every one of our dealers to perform. Subject to their performance we will manage them properly and if they perform they will be with us. If not, they have to give up,” he said.
Syed Zainal said the national carmaker was also realigning itself to introduce products of mass appeal to capture loss ground, adding that its latest model Persona and the planned Iswara replacement model slated to hit the market next January were for the broader market segment.
“Going forward, we will be very mindful about product positioning, and we will try to produce models of various derivatives on selective platforms. We want to have more carry-over from existing components.
Proton chairman Datuk Mohammed Azlan Hashim said the growth of the company hinged on higher revenue from its domestic and international sales, adding that the encouraging bookings for the Persona as well as the deal to supply 30,000 units of Gen2 CBU cars to China were an early indication of the revival of Proton’s flagging fortunes.
“With 13,500 bookings and 1,200 registrations for the Persona in less than a month after its launch last month, the Persona is shaping out to be a positive addition to our product portfolio.
“In China, production for the Gen2 to be sold under the brand name Europestar will start next month for 500 units and sales are expected to commence in December. Although the total number of cars under this deal is modest, this is a massive achievement for Proton as it represents our single largest export order ever,” he said.
Azlan said there was immense potential for Proton vehicles to notch higher sales in Indonesia, and a better prospect of penetrating the Thai market, especially with the recent relaxation of import duties there.
On the ongoing negotiations with German carmaker Volkswagen AG to form a strategic alliance, he said: “At this juncture, there are no facts and figures available to be confirmed. Clearly, we will work very closely with the government and the parties involved.
“We want to be involved comprehensively because we expect to achieve benefits and reap values that include access to product range, access to market and access to technology.”
On Proton’s move to reduce its dealers, Proton Edar Dealers’ Association president Wan Ahmad Sepwan said: “If Proton car sales volume in total per month is 14,000 units, there should not be any issue with 310 dealers. However sales over the last year have been very low, but last month it was an encouraging 12,000 units, especially with the Persona model coming along.
“It would be ideal to have 250 dealers, as it would mean you have the best performers and they in turn receive good returns for their efforts.”
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