Some 1,400 employees will be absorbed under dealership or new investors as Proton focuses on wholesale

by RAHIMI YUNUS / pic by MUHD AMIN NAHARUL

PROTON Holdings Bhd is expected to “sell” over 30 branches in Proton Edar Sdn Bhd’s system to dealers or new investors before trimming the network down further to only four outlets.

Sources close to the matter said the move is part of Proton’s strategy to consolidate its retail network under Proton Edar as focus shifts to wholesale, car manufacturing, and research and development (R&D), while ensuring the dealership is sustainable in the long run.

According to a document sighted by The Malaysian Reserve (TMR), the branch transfer is expected to be done in two batches and the outlet handover would be completed by the end of September.

The document also stated that businesses under new management could then start in October. Notification to investors had been completed in April and the exercise had progressed to transfer activities around July.

An industry source said some 1,400 employees will be absorbed under the dealership or new investors.

“Proton will let go outlets to dealers or new investors. Proton will focus on the wholesale business and the new business model will make operations lean,” the source told TMR.

The source said most of the investors are current automotive retailers and no big players are involved.

In a response to TMR’s query, Proton said it will be focusing on wholesale, but the company remained tight-lipped on the branch transfer.

“Proton is moving towards a strategy where our emphasis will be on wholesale. This is in keeping with international best practices and also to return to the original goals of driving the industrial side of the automotive sector.

“This will then allow us to focus on strengthening our core areas like manufacturing, R&D, product, as well as marketing,” Proton told TMR.

The company said it is still working through the process and any transition will be made seamless where customers and employees will be able to continue business as usual.

Proton added that it will divulge more information once all the details are finalised.

From a global perspective, automotive retailers are facing a myriad of challenges including declining profit margin and rising competition from online sites and ride-sharing, which impact sales outlook in the future.

GlobalData plc director of automotive consulting Animesh Kumar said such a branch transfer strategy makes a lot of sense to optimise operations.

“Automotive players across the globe increasingly want to optimise their dealership network to ensure all the dealers have low cost and give them more control,” Animesh told TMR.

He said the strategy also ensures dealers will not be competing against each other within the same brand.

Proton has been aggressive implementing its turnaround programme since partnering China’s automotive titan Zhejiang Geely Holding Group Co Ltd, which has seen the roll-out of popular models such as the Proton X70.

The company last week previewed its new, smaller SUV called the X50, which is expected to entice the market and drive sales similar to the X70.

Proton recently launched the X70 in Brunei, its first export market for the five-seater which continues to be the leading SUV in Malaysia.