Sunday, 8 June 2008

Extreme Measure: CLOSE ALL PROTON & EON BRANCHES

For a start, since my tenure as an authorised sales and service dealer for Proton Edar for more than 11 years and as the Deputy President of the Proton Edar Dealers Association Malaysia, i have seen 7 appointments of Proton Edar Chief Executive Officers. the first being Datuk Rashid Rahim, then En Abbas Mehad, Acting CEO Stanley Tan, Datuk Maruan Said, Ahmad Tifli, then back to Datuk Maruan Said and now the latest is En Shukor.

What do they all have in common? They have new ideas and every time a new CEO was appointed, policies will change. Considering that Proton Edar receive new CEO appointments almost on average every less than 2 years, new policies introduce were never fully implemented but with every new appointments of CEOs, there will be new appointment of dealers... (to some extend, that contributes to the over-representation of Proton dealers) except for the latest CEO Shukor who are still new. Every time policies were changed, we, the dealers will have to change the song we sing for better or worse. but in all those new policies that were either replaced or introduced or re-introduced, there was one policy that never change: The roles and responsibility of Proton and Proton Edar. Since Proton Edar is a subsidiary of a government-linked company (or GLC), it should pursue the government's main objective to constantly develop new Malaysian entrepreneur via its vendor or authorised dealer programme (inline with the 2nd Industrial Masterplan)

To the contrary, there were no entrepreneurship development program but instead a cognizance approach telling dealers to sell all the cars that their own branches are having difficulty in selling or they will be terminated... ok that may sound abit crude but it is in that note.

The roles and responsibility of Proton & Proton Edar should be re-looked upon if we want to be competitive and become a global manufacturer. Currently, Proton is the manufacturer and Proton Edar being the sole marketing arm and distributor. As both the manufacturer as well as the distribution arm of Proton cars, the quality production and quality deliveries of proton cars to the customer may be affected when the quantitative sales target is juggled with qualitative deliveries. Proton want numbers and customer wants better improved cars.

I am not the best expert but I believe Proton should focus its main objective in R&D to constantly introduce newer model and target a higher exports worldwide as well as improve and produce quality proton cars to compete with other brand whilst Proton Edar (the subject of this article) as the marketing arm of proton should focus in upholding the Corporate Image and protecting the neglected Patent rights of "proton' (now all unauthorised used cars and unscrupulous workshop are all displaying and bearing proton logo) as well as improving the Customer Satisfaction Index via attending, managing if not eradicating all problems complained by the public. This can be attain through re-engineering Proton Edar's owned-branches.

Currently, Proton Edar owned and manage 31 branches, 197 proton edar dealer and a total of 106 EON own-branches and EON dealers. Proton MD Datuk Syed Zainal had constantly reiterate that he will reduce the number of dealers in the network to less than a total of 250 dealers (now there are 324 dealers and branches including EON).

Tengku Mahaleel had over-estimated his influence to terminate EON as a distributor as well as EON dealers. In anticipation that he was able to terminate EON, and in fear that Proton sales will suffer without EON, Proton Edar had appointed more than 100 new dealers a year before his contract expires. with the new dealers being appointed, EON continues to be a distributor/super dealer to Proton doubling the number of dealers in the network to almost 400 Proton edar owned branches and dealers including EON.

With 400 authorised dealers and proton's own-branches in the network, the average that any dealers can sell per month is less than 20 cars with Proton & EON owned branches getting more cars per branch. Perodua has less than half the number of dealers in their network and is selling more than Proton total car sales per annum.

Since then, for the past few years, appointed dealers had exhausted its working capital to stay afloat. with an average of less than 20 proton car sales per month, each dealers will incur losses between RM10,000 to RM30,000 per month depending on the location of the showroom. The lackadaisical sales per dealer was not the fault of the dealers as the market could only take a maximum number of new proton car sales per year. Coupled by the absent of new sellable product range as well as constant productions of cars, the total sales cannot be further improved.
The appointments of dealers cannot be reversed because of the money already invested. The market was congested with dealers due to the over-appointment of dealers by Proton Edar and these dealers cannot be penalise for being appointed as the appointments were made by Proton Edarthemselves. The 'over-appointment' was a mistake made by Proton Edar that resulted in dealers non-performance (due to congestion of dealers in a stagnant market). Dealers were not at fault for not being able to meet the sales target set by proton because the market itself cannot absorb the targeted sales given for all the dealers.

Many think and believe that Proton dealers are parasites (thanks to sean-the-man.blogspot) and a money generating business and those who are not a dealer constantly write and apply to both Proton and Proton Edar to become a dealer. To run a Proton sales dealership comfortably, a minimum working capital of RM3million is required to sell an average 50 cars per month. with an approximate net profit per car after deducting all commissions at less than 2%, it is doubtful that a good return can be attain from the RM3million working capital invested, hence PEDA 'gulung tikar' press statement. Those who are already a dealer of Proton Edar, there is no choice and no exit plan as hundreds of thousand (if not millions) had been spend in the dealership. Those dealer who can afford to write-off the investment, has already surrendor their dealership.

Thus, what will be the extreme measure requires to maintain a healthy network for the benefit of the public? especially with the merger talk between Proton Edar and EON.

i suggest and recommend the followings: CLOSURE OF ALL PROTON OWN-BRANCHES AS WELL AS EON'S BRANCHES (if the merger talk materialise) and the main objective of Proton and Proton Edar can be summarize as follows:

1) Proton as a manufacturer should focus entirely in the R&D of new cars, improve the production quality of its existing cars and target export as the dominant market for Proton cars... hence what they are doing now.

2) Proton Edar as the sole marketing and distribution arm of Proton should focus their resources in the enforcement of Proton patent rights and uphold Proton corporate image. Proton Edar should eradicate all unscrupulous and unauthorised usage of Proton brand name. There are currently NO ENFORCEMENT on the usage of Proton branding.
Proton Edar should listen, attend, resolve and eradicate any problems complained by all customers. To eradicate all problems attached to Proton cars, and further improve its customer satisfaction index, proton manufacturer's warranty should be used as an incentive to the customer rather than punitive. Any warranty claim by any customer should be automatically approved (if it falls under the manufacturer's warranty period) unless otherwise proven. Coupled by strong after-sales network, the public will have more confident in Proton cars.

To ensure these objectives are achieved and without prejudice to the over-appointments of the dealers, ALL Proton & EON's (after the merger- if it really happen) own-branches should be closed and re-engineered to be:

1) a centre for Proton car display and test drive to enhance Proton Corporate Image
2) a centre for warranty and after sales service centres
3) centre for customer complain
4) a centre for development of dealers/entrepreneur development programme.

The sales of new proton cars should be left to individual entrepreneur whom had invested their life savings into the business. Historically, Proton produces what they deemed fit for the public and forced its sales network to sell whatever Proton can produce. The dealers have no choice but to pay and keep in stocks all cars that proton allocated to them. Dealers cannot refuse any cars or risk not having any cars to sell at all. Hence, the actual customers demand for cars are artificial. Dealers interacts daily and regularly with the customer and being the last end of Proton value chain, our feedback will be the closest to real customer's demand . In the absence of Proton's owned-branches, the sales network will be independent from Proton and dealer's feedback will be more constructive to meet the customer's demand. With their life-savings in the business, dealers are more sales-oriented and will only give productive feedback so they can sell more.

Thus, before any dealers who were appointed by Proton are terminated. Proton should first consider closing all its branches as it is also doubtful that their branches can even break-even (on a level playing field as the dealers).
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