Proton supplier to reduce prices by 30%

Proton supplier to reduce prices by 30%

In a bid to lower consumer prices, Proton has given their supplier an ultimatum to reduce their prices by 30% by year-end or be dropped.

According to Second Minister of International Trade and Industry Datuk Seri Ong Ka Chuan, Proton Holding Bhd chief executive officer Li Chunrong had told its suppliers it will source their automotive parts elsewhere if they did not meet their price reduction requirements.

Ong said this was due to high costs borne by consumers as Proton was buying their parts at 30% premium from market price.

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The move, which was also to gain competitiveness in the industry, will allow the car maker to launch good quality affordable models for consumers.

“Asking suppliers to cut prices could reduce Proton’s operating cost, which will enable consumer to enjoy affordable prices,” said Ong.

He added that with the continuous effort taken by Li, Proton may have a chance to win a share in the international market.

Li, who was appointed CEO last October, has been making plans to reform Proton. He also has support from Zhejiang Geely Holding Group Co Ltd in vehicle research and development, after the company acquired a 49.9% stake in Proton.

Ong further revealed proton production fell from 200,000 units to 70,000 units last year and the company was weak in export strategy, as they were confined to domestic sales.

Proton will also shut down its Shah Alam plant in phases and move to Tanjung Malim by next year, with an aim to produce 200,000 units in the first five years and 400,000 in 10 years. Half of the units will be for the export market.

“Thailand is producing 1.2 million vehicles every year, once Proton possessed advanced automotive technology; coupled with affordable prices, I believe having a 500,000-unit production is not an issue in future,” he said.

[Source]

Picture by New Straits Times

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