Proton to reclaim small car segment

With the new product line-up and features, industry observer believes Proton is regaining confidence to reclaim its market share


PROTON Holdings Bhd looks set to recapture its market share for the small car segment (engine size below 1.6L), a class currently dominated by Perusahaan Otomobil Kedua Sdn Bhd (Perodua).

Sales of Proton’s newer models within the last five years have been on the uptrend — with interest mounting specifically in Iriz and the new Saga — and would expedite Proton’s comeback in the B-segment market, said industry observers.

Industry observer Datuk Armin Baniaz Pahamin said the lack of new models with more updated technology might have cost Proton the market earlier against Perodua’s more aggressive approach.

“Now, with the new product line-up and new features, I believe Proton is regaining the confidence to reclaim its market share in that segment,” he told The Malaysian Reserve (TMR) in a telephone interview.

Rivalry for the market segment is intense as sales of vehicles hit the saturation point, while buyers become more prudent in their spending amid the current economic downturn.

Last year, Perodua maintained its dominant hold of about 40% of the total industry volume (TIV) as Proton began to catch up, gaining 54.7% in additional sales in 2019 alone.

The increase pushed the national car manufacturer’s market share to 16.6% in 2019 compared to only 10.8% in the previous year.

Perodua’s sales are mainly generated by the latest Myvi models, especially the third-generation Myvi that was introduced in 2018.

Its five-door B-segment hatch, however, shares the same price segment with Proton’s Iriz and the new Saga, which have joined the market within the last five years.

When Perodua was founded in 1992, Proton controlled close to 60% of total TIV, including the commercial vehicle segment. However, what had happened since seems to be a massive reversal of fortune.

According to the Malaysian Automotive Association, the local automotive market has more than tripled in size in the last 30 years from about 192,000 units of TIV in 1995 to 666,677 vehicles sold in 2015.

Proton’s domestic sales declined during this period, from around 132,000 units to 102,175 units in the respective years.

Proton then lost the second-largest market shares to Honda in 2016, with only 72,920 cars sold for that year. In 2018, Proton recorded its worst sales with only 64,744 units of vehicles registered.

Perodua overtook Proton as the country’s dominant car brand in 2005 with an average of about 20,000 cars sold a month.

Last year, Perodua sold 240,341 cars with the Myvi dominating as its most popular model, followed by the Axia and Bezza. Perodua has been focusing on the sales for vehicles with small engines of below 1.5L.

Among the products established in the last three decades were Viva, Alza and its newly launched seven-seater SUV called Aruz — which were also developed within the same engine capacity.

Proton, on the other hand, has been producing a variety of engine capacity from the smallest engine capacity of 1.1L, like Tiara and Juara around 1996 to 2003, to the largest engine capacity of 2.4L in its latest Proton Perdana launched in 2016.

In the last two years, Proton said its new Persona and Saga models that were launched in 2016 had gained the most attraction. Both models were developed with engine capacity between 1.3L and 1.6L.

The group also saw a revival following its partnership agreement with Chinese carmaker Zhejiang Geely Holding Group Co Ltd in 2017.

Through the partnership, Proton introduced its first SUV, the X70, and also the upgrades for Iriz, Persona, Saga and the seven-seater MPV, Exora.

“In terms of pricing, Saga and Myvi do share the same bracket of consumer portfolios with a spacious cabin and boot, but Myvi, perhaps due to the design, does have the advantage to attract the firsttime buyer and young people.

“However, the new Iriz with its facelift introduced last year may attract the young generation and first-time buyers to compete with the Myvi market,” Armin, the former president of Proton Edar Dealers Association (PEDA), said.

The new Myvi is priced between RM44,300 and RM55,300, while the 2019 Saga facelift is priced between RM32,800 and RM39,800. Meanwhile, the price for the 2019 Iriz facelift ranges between RM36,700 and RM50,700.

Armin said Proton dealers are also expected to ramp up their efforts to sell more cars to cover the huge operating costs following the closing of outlets during the Movement Control Order period.

Perodua Dealers Association Malaysia president Khairul Nizam Ayob said the brand is still in a comfortable position with its market shares, as Perodua has recorded a total of 60,000 bookings in the last four months.

Khairul Nizam said Perodua raked in around 42,000 bookings for June alone as a result of the government’s move to introduce tax holiday for car purchases.

“We could maintain the market share. Based on feedback from the bank, people are buying down from expensive brands like Honda and Toyota to Perodua.

“I think people are more prudent in spending their money now and are opting for more affordable cars.

“I also think that Proton could not take much of the Perodua market as they are going for a more premium class like the X70,” Khairul Nizam told TMR.

PEDA president Liew Vee Lee said bookings for the X70 have tripled since the government announced the tax exemption last month.

“But, Saga still is the bread and butter for Proton, while Iriz sales are recently moving fast,” he told TMR.

Liew said Proton is expected to grow steadily, especially with the market anticipating the launch of the new X50 SUV.

“But Perodua still conquers the small car segment where Proton still has no new models to compete in that segment. For the time being, I think Proton is not directly competing with Perodua,” he said.

He added that Proton is expected to focus on recapturing its glory of selling about 10,000 units a month.

“At this moment, whoever that could maintain the record similar to the previous level is considered good, especially amid the tough situation now,” Liew added.