AAA weekly


Proton: X70, Upgraded Saga Pushed Up Sales in 2019, Automaker Recovering to 2nd Place in Malaysia

Malaysian national car maker Proton’s vehicle sales and market share began to recover in 2019 for the first time in nine years, following the implementation of a partnership with Chinese automaker Geely Group. Proton’s vehicle sales peaked around 2000, then contracted on the back of intensifying competition with foreign-affiliated manufacturers, both sales and market share declining for eight consecutive years between 2012 and 2018. In addition to strong sales of the company’s first SUV model the X70, sales of existing core models such as the Saga and Persona, which underwent minor change using Geely’s development resources in 2019, recovered. Market share, which had fallen to fourth place in 2018, returned to second place in January-November 2019.

Sales recovery was triggered by the launch of the X70 at the end of 2018. The X70 is a midsize SUV based on Geely’s Boyue model. It is the first model to be launched under license from Geely, and it seems that price competitiveness and enhanced connected functions are factors for its brisk sales. Proton has announced that the X70 sold 26,331 units in 2019, becoming the automaker’s core model with more than 25% sales share. The X70 has been imported from China since its introduction in late 2018. However, domestic production of the X70 began at Proton’s Tanjung Malim plant in Malaysia at the end of 2019. The locally-produced model is scheduled to be launched in the first quarter of 2020, and is expected to have greater powertrain specifications compared to conventional imported model. For the local production of the X70, Proton has brokered deals between local suppliers in Malaysia and Chinese suppliers who have delivered parts for the Geely Boyue. Consequently, seven joint ventures have been formed as of December 2019.

The Tanjung Malim plant, which manufactures the X70, is also planned to be used as an export base for Geely Group’s right-hand-drive models in the future. Proton has invested 1.2 billion Malaysian ringgit in the plant by the end of 2019 to start production of new models including the X70. In the coming years, Proton will work on export promotion targeting the neighboring countries in the ASEAN region.

Proton: Launching Local Production of the X70 in Malaysia (December 2019)

▽Launching local production of the X70 ・In December 2019, Proton announced that it will start local production of the X70 in Malaysia. –Since its launch in December 2018, the X70 had been imported from Geely’s plant in China; however, local production began by December 2019 at Proton’s Tanjung Malim plant in Malaysia. – Proton announced in October 2018 that it would make an additional investment of 1.2 billion ringgit at the Tanjung Malim plant with the aim of starting production of new models including the X70. – The locally-manufactured X70 is scheduled to be launched in the first quarter of 2020. ▽Building a supply chain to start X70 production ・For the local production of the X70, Proton has brokered deals between local suppliers in Malaysia and Chinese suppliers who have delivered parts for the Boyue SUV, the base model of the X70. Consequently, seven joint ventures have been formed as of December 2019. –Proton and Malaysian suppliers formed parts supply deals with AVIC Guiyang Wanjiang Aviation Electromechanical and other Chinese suppliers in October 2018 in preparation for the local production of the X70. ・According to Proton’s announcement, the investment in building a supply chain for localization of the X70, including the start-up of joint ventures by suppliers and other technical alliances and foreign direct investment, amounted to 263 million ringgit. These investments are expected to have an indirect employment effect for 1,084 people. ・The local procurement rate of the X70 is set at 30% at the start of production and 40% at the time of starting exports to ASEAN. ▽Difference in specifications between CBU and CKD versions ・The following specification changes are likely to be implemented for the locally manufactured X70 model (CKD model) compared to the Chinese model (CBU model) released in December 2018. –As for the engine, a 1.5L turbo gasoline engine will be newly installed in addition to the 1.8L gasoline engine of the CBU model. – The company plans to adopt the new Proton emblem, announced in September 2019, for the first time. –In addition, according to various local reports, there is a possibility of adding a 7-speed DCT (CBU model is only equipped with a 6-speed AT). In addition, the interior and rear door design will be changed. ・The sales price of the CKD model was not announced as of early 2020 (for reference: CBU model is sold for 99,800–123,800 ringgit). (Created using Proton’s PR materials and various media sources)

Proton: Trends and Plans Regarding the Alliance with Geely Automobile

▽Product license / sales agreement ・In September 2018, Proton signed a licensing agreement and a sales agreement with its parent company, Geely Group of China. –Under the Licensing Agreement, Geely licenses Proton the intellectual property of three models (NL-3, SX11 and VF11). : The NL-3, which is the Geely Boyue C-SUV, will be launched as the Proton X70. : The SX 11, which is the Geely Binyue B-SUV, will be launched as the Proton X50 in the second quarter of 2020. The selling price of the X50 is expected to be set between 75,000 and 95,000 ringgit, below that of the X70. :VF 11 is Geely’s first MPV the Jiaji launched in 2019.It is likely to become the next-gen model of the Proton Exora. – Under the Sales Agreement, Proton will be able to sell CBUs, CKD kits and related repair parts of these three models. ▽ Tanjung Malim plant is to be used as an export base ・Proton and Geely plan to make Proton’s Tanjung Malim plant an export base for Geely Group’s right-hand-drive vehicles. –According to an announcement at the X70 production launch event in December 2019, exports from the Tanjung Malim plant are planned to Brunei, Thailand and Indonesia in the ASEAN region, as well as to Australia, Pakistan, South Africa, South America and the United Kingdom. ▽Proton plans to use Geely, Volvo engines ・In the future, Proton-brand vehicles will be equipped with engines developed and produced by a new company (announced in October 2019), which Geely and Volvo will establish by integrating the two companies’ internal combustion engine divisions. –Proton’s conventional in-house developed engines will be gradually switched to engines manufactured by the new company. According to some reports, Proton may receive HEV powertrains as well. (Created using Proton’s PR materials and various media sources)

Proton: Other Recent Major Business Trends

▽2019 sales results ・According to Proton’s preliminary figures released in January 2020, sales of Proton (including exports) in 2019 were 100,821 units, up 12% from the previous year. – According to the company, sales of the Saga model were 38,144 units, followed by the X70 with 26,331 units. ▽Iriz, Saga, Persona underwent minor change in 2019 ・The Iriz and Persona received minor change in April 2019 followed by the Saga in August. –To improve these three models, Proton has received design and technical assistance from Geely. For all three models, a mesh pattern similar to that of the X70 was adopted for the front grill, and connected function was also installed. –According to the company, the improvement of Saga was carried out over a 15-month period. Seventy seven performance improvements were made by improving 211 parts. ▽Establishing a connected technology development subsidiary ・In June 2019, Proton’s sales subsidiary Proton Edar concluded an agreement to establish a connected technology development joint venture with Malaysian telecommunications carrier Altel Communications and Chinese technology innovation company ECARX Technology. . –The “car connectivity R&D center” will be set up in Malaysia. –The center will conduct research and development of products related to connected, digital cockpit, safety, autonomous driving and IoV. ▽Contract production of Proton vehicles in Pakistan ・In March 2019, Proton reached an agreement with Pakistan-based automaker Al-Haj Automotive to assemble and produce Proton vehicles in the country. – Proton will outsource assembly to Al-Haj Automotive. – Al-Haj Automotive will build a new plant to produce Proton vehicles in Karachi, Sindh province. The automaker plans to invest 30 million US dollars in the new plant which will have an annual production capacity of 25,000 units and employ 2,000 people. It is scheduled to start production in 2021. (Created using Proton’s PR materials and various media sources)
Please log in or subscribe to AAA weekly to view the rest of this report.
Free trial subscriptions are available!