LOCAL NEWS

Proton’s MD, Tuan Syed Zainal, shakes hands with MMC President Osamu Masuko after signing of the MoU.

In the original relationship, Mitsubishi Motors supplied some models to Proton, the first being the Mitsubishi Lancer of 1984 which became the Proton Saga.

Though no longer having a stake in Proton, MMC has been a major supplier of parts, especially engines and transmissions.

Proton needs to find models from other companies to assemble at its Tg Malim plant which has plenty of capacity. It is possible that Mitsubishi models may be assembled there in future.

A new model is likely to be introduced in 12 months, and most likely it will be a replacement for the Perdana. If so, could it be Mitsubishi’s largest model, the 380 (lower picture), that is the basis?

After being unable to come to acceptable terms for a partnership with Volkswagen, Proton has briskly moved on to dealing with another party, this time one which it learnt the business of making cars from – Mitsubishi Motors Corporation (MMC). The announcement that the two companies would work together came as a surprise to many since MMC had made a statement not so long ago about not having any involvement with Proton. However, this new relationship is a different sort from what used to exist for some 20 years when MMC had a minority share in Proton. It is the sort of relationship which Proton is seeking, one where other parties don’t want to talk about having a controlling share.

Both companies signed a Memorandum of Understanding (MoU) today which serves as the basis for exploring four areas of collaboration:-

1. Product development of new Proton vehicles;
2. Supply of components between Proton and Mitsubishi;
3. Technical support for production engineering and quality control; and
4. Optimization of Proton’s manufacturing facilities.

Tuan Syed Zainal Abidin, MD of Proton, said that the discussions are to be ‘results-oriented’ and expects agreements to be signed within a time-frame of 6 months. “In fact, even before today, teams from both companies were already having discussions and exchanging technical documents so we have not been waiting to sign this MoU; we have already started working on details… that is the level of urgency we place on this cooperative agreement,” he said.

On the first area of collaboration – new models – it was said that a new model would be introduced in 12 months and quite likely, it would be a Mitsubishi model which already exists as 12 months is too short to develop a brand new model. Besides, the MoU does not seem to talk about joint product development so it may well be like the way things were before – models which MMC offers to Proton to clone. But this time round, with much more in-house capability, it is also likely that it won’t just be headlights and steering wheels that are changed but perhaps more areas in the model.

Quite likely, the model will be a replacement for the Perdana. The Proton flagship was originally adapted from the Mitsubishi Eterna in the mid-1990s and Proton still buys a lot of parts for it from Mitsubishi, including the V6 engine. It is known that Proton was looking into a joint development of the VW Passat as a replacement for the Perdana and now Mitsubishi is offering an alternative.

Other models will be considered too but it was clear that Tuan Syed Zainal knows that Proton has limited resources and capabilities, and it has to be realistic about what it can really do. “We will try to prioritise what’s important for both Proton and Mitsubishi and we are also mindful of the resources of both companies. We don’t want to start six or seven models when, in reality, we can do just one,” he said, adding that for this year, there will be one new model (probably the SRM).

The other areas of collaboration are pretty much what MMC was doing before but as MMC President Osamu Masuko said, the relationship is different now and rather than ‘teach’ Proton, MMC will now treat it as an equal partner. Mr Masuko noted that MMC viewed its original mission, was to make Proton capable as a carmaker, and that has been achieved. Now, MMC would collaborate in a ‘smart partnership’ with its former student and look for a win-win situation.

In working with Proton, MMC probably sees an opportunity to grow in ASEAN. Unlike Toyota and Honda, MMC does not yet have a comprehensive AFTA plan and if it can collaborate with Proton, then Malaysia can become a production base from which Mitsubishi vehicles can be exported around the region and enjoy AFTA’s preferential tariffs. In fact, had MMC’s partnership with Proton been developed further, it is possible that the company would today have a bigger foothold in ASEAN but during the 1990s, various directions taken by Proton had diminished its relationship with MMC to the point that the Japanese sold off their shareholding altogether.

Proton is hopeful that MMC will help it ‘optimize its manufacturing facilities’, in other words utilise some of the excess capacity available. The new plant at Tg Malim has a lot of capacity and if someone like MMC needs 150,000 cars a year, that would not be a problem to accommodate. In fact, making full use of the installed capacity is one of the Proton CEO’s priorities because it has cost a lot to build that plant.

Mr Masuko made it clear that this new relationship with Proton would not have any effect on Mitsubishi Motors Malaysia (MMM) which was set up last year. MMM will continue with its marketing and sales plans to grow the brand’ share in Malaysia and obviously, if lower-priced locally-assembled models become available, then it would also sell them alongside the imported ones.

 We would be happy if CKD models are available for us to sell as we would then have even more models to offer the public, and CKD models would be priced more attractively too,  remarked Tuan Syed Hisham Syed Wazir, Chairman of MMM, who was present at the signing ceremony this afternoon.

But which models would be assembled? Mr Masuko declined to reveal at this time but Tuan Syed Zainal commented that, in establishing any strategic alliance, efforts would be made to avoid competing directly in the marketplace so identifying the right models would be important. This is probably something that he used to discuss at Perodua because it is known that Daihatsu and Perodua work closely on positioning of Perodua models in export markets so as not to clash.

 We will have to ‘map out’ the products we want to work with and we have to be clear about the markets that we want to go into. First we would look at the domestic market but in my mind, ‘domestic’ in today’s context is not Malaysia alone; it encompasses the whole of ASEAN. And if our collaboration is successful, then we will look beyond at other markets,  he said.

The supply of various components, including engines and transmissions, is not really new. Though MMC is no longer a shareholder, it is still supplying many parts to Proton for the older models. With the exception of the transmissions for the Waja 1.8 and Savvy, all transmissions used in Protons are still Mitsubishi transmissions.

It is possible that Proton has decided to strengthen its relationship with MMC in this area since its CAMPRO engine programme appears to be going nowhere. Furthermore, Proton’s engineers have grown up with Mitsubishi powertrains and are very familiar with them so they would work more proficiently with such products. Their experience trying to install a Renault engine in the Waja has shown that it is no easy task and it may be wiser to stick with what they know best.

That Proton is insistent on controlling its own destiny by not allowing any outside party to take management control is fine if that is how it plans to face the future, provided it remains realistic about its capabilities. Forming strategic alliances and adapting models from others is also acceptable but it also means that Proton may not have the latest technology to offer and will be counting on a segment of buyers who don’t care about the latest and greatest and look at an affordable price as a higher priority.

Proton may have learnt some lessons from experiences with European partners and would have found that the Japanese might be easier to work with. Western companies and executives tend to be very direct and very focussed on objectives and don’t get distracted by cultural or national considerations. It’s all about business and if things don’t work out, they move on, and it’s no loss of face. Asian partners, especially MMC which used to be Proton’s partner, may deal more ‘appropriately’ as they are more in tune with the cultural part of things and understand the meaning of ‘face’.

This time round, there are new teams on both sides and past issues and frictions can be easily ignored. The engineers who were young and eager in the 1980s are now senior people in their divisions but they forged friendships with engineers in MMC and would welcome the opportunity to work with old friends again. This looks like the most promising development that Proton has announced in a long time.