Proton fights to improve quality

Proton fights to improve quality

KUALA LUMPUR (AFP): Malaysia's national carmaker Proton is working to improve quality to ensure it can compete with global giants when the local market is opened up in 2005, a senior official says.

Perusahaan Otomobil Nasional Bhd. (Proton) is collaborating with the British Lotus Group, which it owns, and with Michigan Automotive Research, said International Trade and Industry Ministry parliamentary secretary Fu Ah Kiow.

"Five factors influencing consumer tastes will be studied, namely pricing, design, engineering, safety and brand loyalty," Bernama news agency, in a report late Tuesday, quoted him as telling parliament.

Fu said the carmaker also plans to build overseas plants to increase production capacity in certain sectors.

Proton's tariff protection from imported cars will almost disappear in 2005 under the ASEAN (Association of Southeast Asian Nations) Free Trade Area.

AFTA is due to come into force in 2003 but Malaysia won a two- year deferment for its auto industry.

"The deferment gave the local automotive industry, which is saddled with high production costs and the inability to attain economies of scale, breathing space to boost its capacity to compete in the open market," Fu told parliament.

To attain economies of scale Proton would have to produce 350,000 cars a year against its current capacity of 230,000, he said.

Fu said Proton must strengthen research and development and design and manufacture main components such as engines and transmission systems as well as cut costs.

He said Proton was cutting costs by sourcing components to more than 2,000 suppliers of whom 20 would be main suppliers.

It was also studying ways to penetrate the West Asian and Latin American markets.