Dealers can only offer incentives at their respective branch within the limit and policies set by the principal

by RAHIMI YUNUS / pic by TMR FILE

PROTON Holdings Bhd’s move to divest branches within its subsidiary Proton Edar Sdn Bhd’s system to new investors, which is expected to create a more competitive environment for all direct dealers, will not affect prices of its cars.

Proton Edar Dealers Association Malaysia president Liew Vee Lee said Proton, as the principal, has already placed all the necessary mechanisms on pricing and marketing that dealers need to comply with.

He said every dealer has its customer database and Proton’s decision to dispose of Proton Edar’s branches to new investors would, in turn, increase and widen the brand’s business reach.

“Consumer confidence towards the brand will also increase as more players want to sell Proton cars,” Liew told The Malaysian Reserve (TMR).

TMR recently reported that Proton was finalising its plan to let go over 30 branches in Proton Edar’s system in line with a global trend that sees original equipment manufacturers (OEMs) focusing mainly on manufacturing and the wholesale market.

The move is expected to curb unwanted competition between Proton Edar and all the dealers.

The report was confirmed by Proton Edar CEO Roslan Abdullah who told TMR that the consolidation of the retail network under the company will create a healthy competition between dealers, apart from enabling Proton to focus on wholesale business as an OEM.

Sources said under the exercise, Proton is expected to trim the network down to only five outlets from a total of 53 outlets under Proton Edar when the whole process is completed by year-end.

“Proton Edar seems to be competing with the dealers. The company has its branches and key performance indicators and so does the dealers.

“In the end, we compete with our brand internally whereas we should compete with the competitors,” Roslan told TMR.

With the branch transfer, he said Proton dealers will be able to focus on providing the best customer services, while in terms of product, they should compete with other makes.

Roslan also reaffirmed that there will be no change in terms of price of Proton cars after the outlet handover as dealers can only offer incentives at their respective branch within the limit and policies set by the principal.

“It creates a healthy competition in providing the best services to customers. Pricing is based on recommended prices,” Roslan said.

Liew said the branch transfer move came as no surprise to dealers, as an OEM would ideally concentrate solely on production and marketing, while dealers focus on the retail business.

He said other OEMs are expected to embark on the same strategy in line with a global trend seen in the automotive industry.

Liew said Proton dealerships will be stronger with new investors coming in to manage the branches and there are no concerns about an uneven playing field as Proton regulates its retail ecosystem.

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.

Automakers around the world are now seeking to transform their franchised-dealer network to ensure business sustainability between dealers and partners.

In the future, Roslan said Proton may not need to invest much in showrooms in line with the disruption in the automotive market, while best customer service will still be the main focus.

Proton has been aggressively 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 is expected to launch its first B-segment SUV, the X50, this month.

The highly anticipated SUV is expected to entice the market and drive sales as bookings have exceeded 20,000 in two weeks after it was opened.

Roslan said investors and customers have greater confidence in Proton now and more parties are interested to be part of the company.

“Our network development side has received a lot of enquiries. Many parties are interested to participate because they are confident with the brand,” he said.

Sources said most of the new investors of Proton Edar’s branches are current automotive retailers.