Proton’s transformation message attracting new dealers

More dealers are interested to join the firm since it introduced the new 3S dealership, says association


Proton Holdings Bhd has managed to do what it set out to do, convincing dealers to spend millions in upgrading showrooms and service centres as part of its regeneration plan under Zhejiang Geely Holding Group Co Ltd’s management.

Last week, the national carmaker announced that it has received 170 applications from dealers to participate in its new dealership programme that stipulates every dealer to provide sales, service and spare parts — the so-called 3S requirement — as well as sell only Proton cars.

The new dealership conditions mean that hundreds of the carmaker’s existing dealers must spend to upgrade their facilities to qualify as a Proton dealership. At first, the announcement was met with resistance.

In response, Proton embarked on a public relations blitz, bringing dealers to Geely’s headquarters in China to observe how things work.

But more convincingly, Proton has also introduced a lower entry point, with lower capital outlay, for dealers to get on board.

Proton Edar Dealers Association Malaysia (Peda) president Liew Vee Lee said more dealers are interested to join Proton since the company introduced a new category of 3S dealership.

Called Tier E, the requirement allows for a smaller 3S dealership that is cheaper to set up than the previously three tiers offered.

Liew said previously, the minimum 3S requirement was 1,700 sq m of built-up area, including a 600 sq m showroom for six display cars and a minimum of 10 hoists at the service bay.

“Now, with a smaller version of 3S outlets, we are able to accommodate our principal needs. The smallest tier, known as Tier E, only requires us to invest in 300 sq m of showroom space with four display cars and 400 sq m of service bays area with five hoists at a time,” he said.

Liew said the prospect of Proton under the giant Chinese company, which also owns Volvo Cars, has increased confidence and even attracted non-Proton dealers to apply.

Proton is expected to introduce a model based on the hugely successful Geely Boyue SUV later this year, and many more.

Liew said 30% of those applying to become Proton dealers are new to the brand.

Many dealers are also convinced to invest in upgrades after a visit to China last year.

Liew, who also held a “Boyue teaser session” at his outlet in Kelantan last week, said he noticed most of the customers who visited the showroom were from a different background from the “usual Proton customers”.

“They are not really our traditional customers and most likely, they are not first-time buyers either. These people came from a different segment, with higher purchasing power.

“This could help us enhance our loan approval rate with the financial institutions,” he said.

“Previously, Proton buyers had low loan approval rates from the banks.”

Proton is expected to import the first batches of the new SUV from China this year, until its Tanjung Malim plant is ready to produce the Volvo-based SUV.

As for the new look of the the upgraded Proton distribution centres, Liew said the outlet must be operated in a single roof on a 0.28ha piece of land, smaller compared to the previous minimum requirement of 0.61ha.

“It is more realistic for small dealers, especially in the city areas, to accommodate such requirements,” Liew said.

As it is not easy to find affordable parcels to develop the outlets in the Klang Valley and other big cities, some dealers had previously appealed and asked Proton’s consideration to allow them to operate separate centres within the same general location.

Liew said Proton had declined the request and offered them the scaled-down package.

Liew said a series of engagements between Peda and Proton Edar Sdn Bhd had been held in the past months to set a clear direction on this matter.

“That is where we had closer communication and this enables Peda to address the issue from our members and find the solutions.

“It is important that we continue the approach as we could not talk about the upgrade requirement grouses over the years,” he said.

Liew said it is compulsory for any automotive players to have a 3S or 4S outlet with a better corporate image to remain relevant in this industry.

Proton CEO Dr Li Chunrong (picture) had previously said the move is a way to enhance the automotive customers’ satisfaction and experiences in visiting Proton’s service centres.

However, not all Proton’s exi st ing dealers were convinced. Many of the smaller dealers are still not convinced to spend the millions they need to upgrade.

A dealer, who did not want to be named, said years of losses as Proton dealers and confusing policies have created scepticism among them, and they are reluctant to spend on upgrades.

“The dealers have had limited finances due to years of losses, especially when they were being pushed to sell more cars and bear the holding stock interests — which became a threat to their return on investment,” the dealer said.

Proton has addressed some of its policies to relief holding costs for dealers as part of its measures to convince smaller dealers to join the programme.

“However, there also some of us that are more prudent, and we prefer to wait and see. Perhaps, they are waiting for the upcoming general election which might affect Proton’s direction,” the dealer said.