Proton in billion dollar push

MALAYSIA'S national car manufacturer Proton has revealed a $1 billion product makeover which will see virtually its entire model range renewed by the end of 2004 and some exciting new models added.

The massive workload includes separate styling direction for each of the 16-year-old company's product lines, dramatic interior styling, a new range of engines and computer-controlled active suspension.\ Much of the technological innovation is coming from UK-based Lotus, in which Proton has an 80 per cent controlling share, while the styling development is centred on its Shah Alam headquarters in Malaysia.

The trigger for this rush of product is the lowering of protective tariff barriers in Malaysia from 2005 as part of an AFTA (Asian Free Trade Association) agreement, which will see the market open up to ASEAN competition.

Currently Proton enjoys a 65 per cent share of the Malaysian market with a range of rebadged and restyled Mitsubishi product, although this share could fall to as low as 30 per cent once tariff barriers fall.

Proton's future plans were revealed to Australian automotive media by company chief executive officer Tengku Mahaleel during a visit to Australia last week.

"I'm gambling, I'm saying to you I am going to change the whole personality of Proton," he said.

The first evidence we will see here of Proton's plans will be the 1.6-litre Waja small-medium sedan which goes on sale in September. This is its first original car, although it still uses a Mitsubishi engine.

In the first quarter of 2002 a 1.8-litre version of Waja will be added while a utility version of the current generation Persona powered by a 1.5-litre, four-cylinder engine should also arrive here around then.

But the real excitement is further down the track with an all-new Satria GTi "hot hatch" tipped to be powered by a new high-performance 2.0-litre engine and have active suspension developed by Lotus.

There is even the prospect of a V8 saloon in the works, the engine being a modular unit that will also see service at Proton as a V6, probably installed in a radical aluminium chassis 2+2 sports car.

A new small car is under development to sit below a new generation Satria range, there will be a new Persona (Wira) that will share the Waja platform, while even the Waja will be reskinned by 2004.

These cars will be powered by the new generation "SENG" four-cylinder engine family which will feature Lotus-developed cylinder deactivation and eventually be camless and spark plugless. Initially, 1.2 and 1.6-litre versions will be produced.

A four-wheel drive system to suit both a proper small off-roader and the aluminium chassis are also under investigation by Lotus.

The new range of cars will be built at a new plant called Proton City on the outskirts of Kuala Lumpur. It will be built at a cost of $700 million.

Toyota is consulting to Proton on the design of the new plant.

Mr Mahaleel said Proton had developed separate looks for each of Proton's products to lessen the risk of failure if the public rejected a particular styling look.

But he said the interiors of the new generation cars would be uniformly challenging: "All our new cars after the Waja you will find the Lotus DNA inside aluminium, very spartan, but very sporty, very unique." The aim of all this work is to sell Proton as a car that is exciting to drive rather than just a cheap means of transport.

"We are looking for youthful exuberance," Mr Mahaleel said.

Australia a test tube for ideas

TENGKU Mahaleel's bullish prognosis for Proton is not supported by the company's performance since it arrived in Australia in the mid-'90s, only once selling more than 3000 cars in a year here.

But Mr Mahaleel says profits in Australia are not a motivation for the moment, preferring to see the local operation as a test tube for ideas in one of the world's most cut-throat markets.

He also has a more fundamental reason for the lack of Australian inroads: "We are in a holding pattern because right now our products are not competitive. But come 2003 then we will become very aggressive." That is when a flood of new product starts churning out of the new Proton City plant, two years before tariff barriers fall in Malaysia and Proton has to compete against Ford, GM and other major manufacturers who build cars within ASEAN.

Proton currently builds around 300,000 cars per annum, with just 30,000 slated for export. Long-term, production may climb to 400,000 if plans to build cars in developing markets like China, India and Iran come together.

Mr Mahaleel estimates 60 per cent of production will then be for domestic sales, with 40 per cent for export.

Mr Mahaleel met with his Australian team this week and confirmed the new Waja would come to Australia with an entry price close to $25,000 - a price widely regarded as too high.

The Perdana V6 - which is based on the Mitsubishi Galant - was rejected as a possible car for Australia in the same meeting.