Wary vendors slow to re-tool for Proton X70

By AFIQ AZIZ

Some Malaysian vendors of Proton Holdings Bhd are still unconvinced about the X70, the company’s first model under Chinese management that has already piqued buyers’ interest.

Proton plans to assemble the X70, which is based on the hugely successful Geely Boyue, at its Tanjung Malim plant by mid-2019, but vendors said it is still a gamble for them to re-tool to make parts for the SUV.

A vendor said Proton estimated a volume of between 3,000 and 5,000 for the first batch of locally assembled X70, which is viable for re-tooling, but past experience has raised their concern about the total orders.

The vendor told The Malaysian Reserve that in the past, vendors lost money when the final orders fell short of estimates from Proton on several models, including the Preve sedan.

“This is another new model from Proton and we are still unsure of its market potential, so we have not invested in new tooling.

“We have instead asked Proton to bring the moulds from China for us to produce the X70 to its specifications. That would make more economical sense,” said the vendor, who declined to be named.

Earlier this year, Proton vendors complained they suffered losses in the past due to unfulfilled benchmark numbers and that was an indication of its business model.

Currently, Proton controls about 12% of the passenger vehicle market in Malaysia. It sold 70,991 vehicles last year.

Another industry source said another problem faced by Proton is that local vendors still lack the capability to adapt Geely Automobile Holdings Ltd’s technology despite the Chinese carmaker freely allowing technology transfer.

“Local suppliers still lack the capability to adapt and invest in Geely technology, particularly in powertrain (engine and transmission) steering system components.

“These are the areas in which the local and foreign vendors who are operating in Malaysia do not have (the capability),” said the source.

The source said one-third of the cost in car manufacturing is the powertrain production.

The Proton Vendors Association, however, downplayed these concerns and said local suppliers are ready to participate in the domestic production of the X70.

President Azalan Omar said the vendors have received letters for them to produce the X70 parts, but he did not say how many of them have signed on.

In the special media preview on Sept 7, Proton VP (manufacturing) Yoshiya Inamori assured that local production of the SUV will start on schedule, with the participation of more than 600 local vendors.

It is also expected to align with the direction set by Prime Minister Tun Dr Mahathir Mohamad that any project between the two carmakers must benefit local automotive players, especially in the components manufacturing activities.

In his working visit to China last month, Dr Mahathir had highlighted that the collaboration should accelerate the process of improving Proton cars, especially in terms of technology and quality.

Prior to this, TMR reported that about 10,000 units of the model would be imported as a “bridging volume” before the product could be assembled in the country next year.

So far, the SUV has received over 5,000 bookings in less than a week after the media preview. Proton is expected to announce the price for the model by year-end, in conjunction with its official launch.

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