Is it real, or is it just a mirage or just a distraction

I would think almost everybody in Malaysia today is surprised by the announcement made by the second Finance Minister, Tan Sri Nor Mohamed, that there would be no deal between the struggling Proton with neither Volkswagen nor General Motor. It was said due to Proton turnaround plans is showing signs of progress. Among the progress made by Proton is:

• Proton next financial year losses is expected to be significantly reduced;


• Proton’s market share has increased from 22% to 31%;


• Increased export orders from China, Iran, Indonesia and Thailand;


• Number of dealers reduced from 362 in March to 304;


• Closer cooperation with Lotus to ensure technology was transferred to Proton vehicles;


• Sales have increased with 21,580 bookings in the past three months; and


• Reduction of inventory by 50% from three months to about a month.

I totally disagree with the decision to scrap the negotiation with foreign suitor. Just because the early success enjoyed by the new Proton Persona model and several agreement to sell cars to Iran and China, the government thinks that Proton is already doing well?
And how come reduction number of dealers is a sign of improvement? What the dealers have to do with Proton anyway? I thought dealers are privately own. What is that have to do with Proton’s performance.
Is Proton market share really increased from 22% to 31%? In late October, Perodua MD told The Edge that Perodua sales have remained strong with continuing production increased. This shows that Perodua demand is still there. And there is probably more new Honda and Toyota on the road compared to new Proton. In the end the main question is, is market share really important for a company’s profitability? If Proton decides to sell their car at RM10k, I bet their market share will jumped tremendously but they will have to incur massive losses.
With AFTA going to take its effect soon and the biased FTA signed with the Japanese, can Proton compete with its competitors in a level playing field? With partnership with VW or GM they might be able to survive, but without them, I think Proton could end up being another Perwaja Steel.

*Yesterday the market price of Proton share fell to RM3.94 after the announcement was made. I got to think that maybe this is what Khazanah intend to do. Let the price fall and take Proton private and after that sell it to VW or GM. It’s a good way to make quick money. Just my naughty taught.