LAST_UPDATESun, 22 Jul 2018 2pm

Proton Responds To PEKEMA's Allegation Over Discrimination Against Bumiputera Dealers

Since Geely's takeover of Proton, a sense of quiet optimism has been abounding Proton's fate in the Malaysian automotive industry.

Plenty of experts have weighed in their opinions, and general consensus seem to believe that Geely is the right company to bring Proton back to their former glory. But that's not saying that there has been no issues so far.

One of the bigger issues that Proton is facing right now, is claims by The Malaysian Association of Malay Vehicle Importers and Traders (PEKEMA), saying that the Geely administration led by chief executive officer Li Chunrong,  has been discriminating its Bumiputera dealers.

In an exclusive interview published by Utusan Malaysia, PEKEMA president Datuk Zainuddin Abdul Rahman claimed that the welfare of Bumiputera Proton dealers have been cast aside by the Geely administration.

He even said that if no action is taken by the authorities, he fears all Bumiputera dealers might go bust.

Utusan Malaysia quoted Zainuddin as saying that he fears that Proton has strayed from their original purpose, and that PEKEMA is worried that Proton is now fully controlled by Geely.

In his interview, Zainuddin reveals that there are nine major issues faced by the Bumiputera vendors, which include an array of problems such as lack of time to upgrade their outlets, to lack of special discounts that are able to be offered by them.

However, in light of these recent accusations, Proton has issued a statement in which they addressed each and every one of PEKEMA's grouses.

One of the issues brought up by PEKEMA is the lack of time to upgrade their 1S outlets, but Proton stated that dealers are encouraged to upgrade over a span of two years, and not one year as stated.

In their statement, Proton revealed that their push for all the 1S (sales) outlets to upgrade to 3S (sales, service, spareparts) centres is to improve their dealership network, and bring it up to par with other brands in Malaysia.

"With regards to the lack of time given to dealers to upgrade their 1S outlets to 3S/4S outlets, dealers are encouraged to upgrade their outlets over a period stretching from 2018 – 2020.

“The target for 2018 is to substantially increase the number of 3S outlets located nationwide, which will enhance overall customer experience with the introduction of our new models beginning 2018.

“Currently, the 3S/4S dealerships nationwide, is equivalent to only 30% of our total dealerships," Proton stated.

Proton also addressed other issues brought up by PEKEMA, such as the abolishment of the Payment After Registration (PAR) system, the reduction of profit margins for dealers from 4% to 3%, and the restriction on dealers should vehicle stock go unsold after 60 days, as well as the provision of a special 10% discount directly to associations, instead of leaving it to dealers.

"The Payment After Registration (PAR) system is not practiced by other automotive companies in Malaysia. Proton has decided to end the scheme in order to ease the Company’s tight financial situation.

"Currently, Proton finances a total of RM650 million a year for its dealers. If we continue to practice PAR, the amount payable to Proton by the dealers will grow resulting in a negative effect on our cashflow," the statement read.

The company clarified that their dealers enjoyed a 4% margin based on a monthly volume of 40 units agreed with Proton to qualify for their sales incentives in the past.

"We have now revised the scheme by lowering the threshold to encourage overall business growth for dealers. This scheme is in line with current challenges faced by dealers and Proton will continue to monitor the situation to ensure business growth is achievable.

"In addition, Proton also provides quarterly incentive scheme throughout the year, where dealers can earn extra income by exceeding their sales targets. Proton also provides state incentive support for on-ground activities by dealers," Proton conveyed.

All in all, Proton's statement reiterated their commitment in making the company one of the premier automotive brands in Malaysia. And if this is to be achieved, some changes will have to be made.

With its statement, Proton hopes to clear some of the misunderstandings between them and PEKEMA, and show that their commitment in helping the Bumiputera has never waned.