This article first appeared in The Edge Malaysia Weekly on December 30, 2019 - January 5, 2020

THE year was 2010, and signs that automotive company Proton Holdings Bhd’s battery needed recharging again were already there. So, once again, whether because of misplaced patriotism or just plain folly, Proton was put on life support by the government, which has spent nearly RM14 billion on the national car project in grants, various forms of assistance and taxes foregone since its inception in 1983.

Fast forward to 2019, and Proton continues to produce cars out of its Shah Alam and Tanjung Malim facilities — but now helmed by Chinese automotive company Zhejiang Geely Holding Group Co Ltd, which managed to reverse Proton’s losses after years of insipid performance under DRB-Hicom Bhd.

The past decade saw several momentous changes in the Malaysian automotive industry, some for the better, some for the worse.

Proton and Perusahaan Otomobil Kedua Sdn Bhd (Perodua) claimed 55% to 60% market share of total industry volume (TIV) in 2004, but their grip began to slip after the government resolved to reduce car prices by cutting import taxes and introducing more incentives for locally assembled models. In a short time, foreign brands became increasingly competitive in the local market.

The Tan Chong Motor Assemblies (TCMA) plant in Serendah opened in 2007, starting with the assembly of the Nissan Almera — a small sedan model that would become the spark for change in the local automotive market.

Launched in 2012 at RM64,887, the Almera was priced within the reach of many Proton buyers, as the highest trim of the first-generation Persona then was priced at RM55,800.

In 2012, the government decided that it would no longer own a direct stake in loss-making Proton and Khazanah Nasional Bhd, then Proton’s largest shareholder, sold its 43% stake to DRB-Hicom for RM5.50 per share, or RM1.29 billion.

Despite being in private hands, Proton continued to head downhill and by end-March 2015, had racked up RM1.93 billion in cumulative after-tax losses for DRB-Hicom.

By 2014, Proton’s market share had dipped below 20%, and with Perodua’s share combined, the two touched only 47% of TIV as non-national car marques gained a larger share of the market.

Globally, electric and hybrid engine cars started to be mass-produced in the 2010s. In December 2010, Nissan introduced the LEAF, the world’s first mass-produced electric car.

Electric cars were also introduced in Malaysia, but the lack of infrastructure has prevented mass adoption.

Following Budget 2011’s import tax exemption, sales of imported hybrid cars jumped 2,000% to 8,334 units in 2011 from a mere 328 a year earlier. Sales spiked to 15,355 units in 2012 and 18,967 in 2013.

However, the exemption was scrapped in 2014 for imported hybrid models as, under the National Automotive Policy 2014 (NAP2014), the government prioritised incentives for the local production of energy efficient vehicles (EEV).

Quickly seizing the opportunity, Perodua introduced the Axia, the country’s first EEV. Launched in September 2014, the model quickly became a best seller, and together with the ever popular Myvi, helped boost the carmaker’s market share past 30% for the first time in 2015 — a record year for sales as 666,677 units were sold, buoyed by rush buying ahead of the introduction of the Goods and Services Tax in April of that year.

Not surprisingly, TIV slipped 13% to 580,124 units in 2016, the first time the market had shrunk to below 600,000 units since 2009.

In the same year, Honda — represented by DRB-Hicom in the Malaysian market — replaced Proton as the second most popular make with a 15.8% share against Proton’s 12.5%.

At the same time, ride-hailing companies, particularly Grab and Uber, were beginning to cause disruption, especially to public transport.

Local player Grab was founded by Anthony Tan and Tan Hooi Ling as a taxi e-hailing service in 2012. In many ways, the growth of Grab over the last seven years has raised the question of whether Malaysians should be investing in private vehicles anymore given the low level of utilisation of private cars since most people make use of their cars only for an hour or two daily.

Car sharing has also become widely available in major urban areas such as the Klang Valley, Greater Penang and Iskandar Malaysia, with Malaysian GoCar and South Korean SOCAR the two major players in this segment.

Through car-sharing platforms, one can simply book a car that is available at a designated area, drive it and be charged either hourly or daily. For many, the conclusion is simple: One does not need to own a car to get by anymore.

For Proton, September 2017 marked a turning point. Having borne the burden of Proton’s depressed sales and losses, DRB-Hicom sold 49.9% of Proton to Zhejiang Geely for RM460 million, in a deal that also saw Geely taking up a 51% stake in sports car maker Lotus.

Under the management of Dr Li Chunrong, formerly from Dongfeng Passenger Vehicle Company, Proton’s sales and services network was revamped and upgraded into 3S and 4S centres, with higher quality standards implemented in the manufacturing process.

Proton was given the right to redevelop Geely’s Boyue SUV into a right-hand drive model, locally named the Proton X70, which has proved popular with motorists.

Following the change in government in May 2018 and Tun Dr Mahathir Mohamad’s return as the country’s seventh prime minister, the nonagenarian has reverted to his long-held view that Malaysia should develop its own automotive technology.

In this regard, another national car project, to be spearheaded by local engineering company DreamEdge with Daihatsu as a technology partner, is expected to be launched in 2022, at a cost of RM1 billion.

At the same time, Putrajaya has also encouraged the development of drones as a mobility service. A homegrown international drone operator Aerodyne, is reportedly developing Malaysia’s first flying car together with its partner in Japan.

Despite the new developments, the new iteration of the National Automotive Policy has yet to be introduced as there have been a number of postponements to its unveiling.

The flying car and the third national car company have become a point of contention, with weary taxpayers asking why the country is going down this costly road again after having spent billions of ringgit over the past decades attempting to salvage such non-starters.

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