MERGING Proton (5304) and Perodua into a single entity will be a step forward to boost the Malaysian automotive industry, according to the Proton Vendors Association (PVA).
Its president Datuk Dr Wan Mohamed Wan Embong said it will be timely for both national car manufacturers to look at the positive impact of consolidation as this could help the automotive industry to expand globally.
"From our perspective, we need to look at the future rather than today because moving forward, the industry will definitely face great challenges," he said in an interview.
"In fact, the global economy will be challenging, full of uncertainties. Even though some say challenges are opportunities, there is pressure to perform," he said.
It was reported earlier that the government has signalled the need for a merger in the automotive industry, especially between Proton Holdings and Perusahaan Otomobil Kedua Sdn Bhd (Perodua).
In giving the association's views, Wan Mohamed said that "firstly we need to look at the positive side".
"Today Proton is so much better than three years ago and we have to thank the management as the company made a turnaround last year," he said.
"We believe that they are going to do better this year, ahead of the new model line-up planned for Proton."
Wan Mohamed said Proton's share in the domestic market is also increasing rapidly.
"Three years ago, Proton was at 27 to 28 per cent and recently it is close to 30 to 31 per cent in the domestic market, based on the total industry volume," he said.
"Based on the production forecast, Proton will produce over 200,000 cars during this financial year (March 2010 to March 2011)."
According to Wan Mohamed, one of the major advantages of Proton is that currently it has spare capacity.
"This spare capacity can be utilised by Perodua without looking for more investments. This will lead to better production efficiency," he said.
Wan Mohamed said combining the engineering expertise and services of Perodua and Proton, there will be some cost savings.
"They will have more engineers to look into design development and better processes," he said.
Wan Mohamed said the use of common parts by Proton and Perodua could lead to economies of scale, bringing down the cost.
He said it is also possible for both of them to share the platform in producing new models, leading to major cost savings.
For the Malaysian automotive industry to grow, Wan Mohamed said "we cannot forever be depending on the domestic market".
"We have to get into the overseas market, be global and in this regard, Proton is well-placed to assist Perodua to use its network to bring Perodua cars into overseas markets more aggressively," he said.
Wan Mohamed said there could be consolidation among the Proton and Perodua dealers, enabling each dealer to sell more cars.
He said that on the vendors' side, about 70 per cent of them are already involved in serving both Proton and Perodua.
Moving forward, Wan Mohamed said "we still need an overseas partner that will bring Proton and Perodua to another level".
"If not, it will take too long for us to do it on our own," he said.
"This is something for Proton and Perodua to look into. It is time for us to look for a partner that will bring us to another level and this has to be sooner than later," he said. - Bernama
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