Supplier Proton problems due to slow SUV sales caused by Chinese rival – production cut to clear inventory

A few months ago, it was reported that Proton’s suppliers were facing “severe financial stress” due to the national carmaker’s failure to meet the quantity of parts it had ordered. for its SUV models – SUV models. X50, X70 And X90. We raised this issue in the following Q&A session press conference yesterdayand the company’s deputy CEO Roslan Abdullah stepped in to give his comments on the situation.

Roslan said the problem stems from an unexpected slowdown in sales due to the influx of new competitors from China, especially Chery. “The [current] situations, with competitors engaged in the same product [segment]Their price gap is not more than RM5,000, which affects us [ability] to honor [orders].

“When we make plans [our production] For example, for X50 in 2020, [Honda] HR V is the only competitor. But now, I think some of you just returned from China [after Auto China 2024 in Beijing]you know how many cars are coming and [take a piece of the pie],” he said, adding that Proton is adjusting production to clear inventory, thereby reducing orders.

A different view was offered by production manager Mohd Shaharuddin, who said that Proton has a regulatory commitment to fully fulfill orders in one month and five months of expected orders, with fluctuations of no more than 5% per month .

However, the most recent problem of non-fulfillment of orders is not due to Proton not wanting to produce cars but rather due to the inability of some suppliers to produce parts and maintain the supply chain. “We have 127 suppliers, but the big three cannot supply parts, so we certainly cannot produce cars,” he said. “In the last three months this is what has happened.”

As for complaints that Proton is sourcing more components from China at the expense of local suppliers, Roslan said the problem, as always, lies in cost – implying that parts Chinese-made accessories are cheaper. “When we order anything with the Proton logo, customers expect it to be cheaper than the rest. So what options do we have to meet customer expectations?”

He added that Proton has asked local suppliers to focus on price reductions so that it can sell its vehicles at prices that meet expectations. “We can just say, “Okay, when [vendors] If we increase the price, we will only increase the price of the car.” And yes, we can get higher profit per unit, but can we achieve it Malaysia #1 or ASEAN #3 [in terms of sales numbers]? That’s the question [we ask ourselves].

“Despite this, as a Malaysian company, we have always focused on Malaysian suppliers for growth and focused on achieving better cost efficiency,” commented Roslan.

Proton will certainly be hoping for a refresh when it comes to its aging SUV models – including the X70 upgraded due this year – will reverse fortunes and return sales to “normal” levels. Meanwhile, suppliers will have to hold out a little longer.

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