KUALA LUMPUR — Chinese automaker Zhejiang Geely Holding Group has begun turning Malaysia into a base for exports to Southeast Asia and beyond, after improving quality controls at local car producer Proton Holdings.
Local unit Proton resumes overseas shipments for first time in three years. Company shipped 225 cars to Egypt on Thursday, after sending 453 autos to Iraq and other Middle Eastern countries in July. These marked Proton’s first exports to anywhere since 2015.
Building up automaking as an export industry has long been a goal for Malaysia, which started Proton as a national project in the 1980s under Mahathir Mohamad, then serving his first tenure as prime minister. But the road has been rough.
Geely, one of China’s rare privately owned automakers and the owner of Sweden’s Volvo Cars, bought into the struggling Proton last year in a state-led turnaround, taking a 49.9% stake.
In August, Geely and Proton expanded their partnership with plans for a new car factory in China and cooperation on electric vehicles.
Though Southeast Asia “will remain as the main priority for Proton’s export business,” Middle Eastern demand will help fuel its growth, Proton CEO Li Chunrong said in July.
“The Middle Eastern markets hold high regard for products from Islamic countries like Malaysia,” Li said.
The shipments bound for the Middle East were drawn from Proton’s existing models, including Saga and Exora. Proton adopted the quality management system used by Geely and Volvo, paving the way for its latest bid to crack export markets.
The Malaysian automaker achieved a threefold improvement since adopting the system, which tracks the rate of problems discovered on production lines. Proton received 1,786 demerit points as of the end of June — a smaller number means better quality. By comparison, Geely scored 1,200 points, while Volvo had 850.
Proton aims to reach 1,500 points at the end of 2018 as the company prepares to roll out the X70 sport utility vehicle, a rebadged version of the Boyue, one of the best-selling Geely vehicles in China.
That model will be fully built in China, but Geely is expected to make Proton a global production hub for exporting vehicles with right-hand drive, according to automotive news site paultan.org.
Proton’s sales remain sluggish, totaling 44,700 vehicles in the first eight months of 2018 for a 10.6% share of the Malaysian auto market, Southeast Asia’s third largest in terms of new-vehicle sales.
Geely also is bolstering Proton’s dealership network by upgrading showrooms to include after-sales service and parts. The group said Proton has achieved 92% of its target for upgrading outlets as of the end of August.
Malaysian automotive group DRB-Hicom owns the remaining 50.1% of Proton but has given its Chinese partner the lead in managing the company.
Article originally published in1 Nikkei Asian Review