Proton is the Malaysian car maker established in 1983, the brainchild of the then Malaysian Prime Minister Mahathir Mohammed.

Initially, relying heavily on Mitsubishi for technology/design as well as strategic government support on taxes and benefits, it had carved out a significant local market share but poor international representation.

It was only in 1996, with the acquisition of Lotus Technologies did Proton emerge as a serious international car maker. While Lotus did give them the edge in terms of vehicle design and ride and handling…the absence of a state-of-the-art engine-transmission technology has prevented the car (GEN2) to be a real serious contender in the international arena.

On a slightly small but significant note, I have personally tested the GEN2 for almost 15,000 kms and the overall ownership experience is good (for the price, that is!). Where it falls short on expectation is the powertrain (engine and transmission). The engine is noisy (calling it a ‘sporty, hence noisy’ engine will not convince all of them. while the5 speed manual gearbox is a tad notchy and the gears sticky, at higher revs,.. the 4 speed auto box is an utter disgrace and less said about it, the better!...). While the others (not the Japanese machines) already have 6 speed and tiptronic gearboxes, this 5 speed and 4 speed transmissions are a glaring handicap and prevents anyone to consider the GEN2 a serious title contender in that segment…

Where it however, redeems itself is in the ride and handling department (this is where Lotus Technology comes in!).

It is common knowledge that one of the best handling cars currently in this segment is the Ford Focus and I must admit that the Proton GEN2 beats the Focus hands down,……. no contest!!!!…it ‘corners, like on rails’ thanks to the intricately-designed front and rear suspension and the sharp and the precise steering makes it an absolute scream to drive….(pity it doesn’t have the engine and the gearbox to go with it!...i would personally like to see a 2.0L turbo charged monster under the hood with a 6 speed, steering mounted paddle shift to justify and compliment the superb vehicle dynamics…)

Now coming back to the subject,…..To come up with a contemporary and complete hi quality, internationally competitive product, research and development (which could take anywhere between 2 to 3 years for engine-transmission technology upgrade alone, as is the case with the current CAMPRO engine in the GEN2) calls for a huge investment which Proton at this stage can hardly afford as the sales have been dropping quite rapidly and there is a need to prop up sales with price and additional owner benefit advantages(which means money needs to be spent in this area rather than on Product development).

A technical alliance partnership with a global manufacturer would have worked out perfectly for them, providing valuable engine-transmission tech. upgrades to match international standards.

Volkswagen was the first manufacturer to come forward with a strategic alliance plan, where the technology would go to Proton in exchange for the large and low cost manufacturing base of Proton for the south East Asian market, where Volkswagen’s market share was traditionally low.

Typical of any government organizations, the long drawn out decision-making and the much publicized seeking of similar possible partners jeopardized the talks with Volkswagen in 2004 (which stretched till end 2007).

The reason given for the collapse was citied as Volkswagen’s interest in ultimately being a controlling investor rather than just a strategic partner.

How the government and Proton’s Board of Directors should have considered this offer is:

They should have accepted Volkswagen’s offer of share holding interests but with a delayed time interval and then sell/disinvest at the future prevailing share value which would have definitely jumped much higher once Proton’s product range and market share(and earnings) has improved. Volkswagen would have gladly committed to such a deal as they had done a similar joint venture package with China for FAW (First Auto Works) and SAIC(Shanghai Automotive Industry Corporation) and then spread their wings in China with 11 other JVs. It would have been a fair deal for all and more long term benefit for the country.

Moreover,...Volkswagen is definitely a successful international brand and an alliance with them would have given Proton a huge image boost as well as access to a wide range of expertise, technical suppliers and a superb worldwide distribution network.

Not to mention the huge job market they will create if they plan to use the Malaysian base for the entire South East Asian markets.

What the government could also do is to make VW invest in talent creation and management, community projects, and commit to export volumes (hence additional international revenues).

they can also make them fund new tourism and automotive and non-automotive investment ventures…….the possibilities are endless…

Shutting the door on a successful business group will only tie down the country’s growth and make it harder to survive as a stand-alone player in the international business arena ….

The government should treat the company as a business entity and an investment avenue, not as another department of the government or a vote machine!

Let the professionals do their jobs and show the profits which the shareholders(in this case, the people of Malaysia) want…..look what the Indian Government did with Maruti Suzuki….learn…learn…..