Proton dealers brave challenges on declining sales, rising charges

Dealers must now sell more cars or face ballooning operating costs


Proton car dealers are facing a difficult period as higher vehicle allocation, lower sales and rising holding charges hurt bottom line and has forced some sellers to abandon the venture.

Proton car dealers, which had one time enjoyed brisk sales, long waiting time for allocated cars and customers lining up at their doorstep, now must sell more cars or face ballooning operating costs.

A Proton dealer who spoke to The Malaysian Reserve (TMR) said they are allocated twice the number of cars, pushing their stock holding cost to RM3 million and have to face higher charges.

“Proton automatically allocates to us around 50 cars a month or double than the average sellable number of 20 units. After two weeks, the unsold units will be subjected to 10.35% interest rate per annum,” said the dealer who asked to remain anonymous.

Holding so many vehicles and without the sales, said the dealer, has taxed the their bottom line.

“For example, 20 units of Persona model are worth around RM1 million. Thus, interest chargeable to dealer would be at RM103,500 a year, or RM8,600 monthly.

It is equivalent to around RM20,000 interest each month (for the unsold cars),” he said.

Dealers worry as the interest will snowball when new car allocations arrive at their lot, said the dealer.

“We are struggling to sell at least 40 units of vehicle to meet the breakeven point,” said the dealer, adding that such high capital could forced more dealers to abandon the business.

He estimated that already 20 dealers have decided to seek other business opportunities.

Proton sold 66,190 units from the January to November 2017 period. Last year, Proton sold 72,290 vehicles.

Dealers are not the only one that have to adjust to changing landscape with new substantial ownership in Proton. Vendors that make parts for Proton cars have been asked to slash their prices by 20%, or stand to risk the business as the new management seeks to speed up the recovery at the car company.

Proton, which was the country’s leading carmaker in term of sales, has been struggling over the last decade. In 2007, the company that first produced rebadged Mitsubishi in 1985, saw its market share falling to 24% from over 64% of the country’s total vehicle sales.