Thursday, 2 July 2009

VSS for Proton dealers.............

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The compensation paid to dealers to surrender their dealership was NOT a BAILOUT to dealers but merely to compensate Proton's previous adverse policy decision. The National Economic Recovery Council had expressly froze the appointment of new dealership in Para 17 of the NERP (See: NERP) but more than 100 dealers were appointed that resulted in the current endless predicament.

The compensation offered (RM150,000 average) was negligible when the RM1million compulsory capital requirement (before dealership appointment) was fully exhausted when dealers struggled to:

1) Compete and survived internally in a network with, at the highest, 400 dealers (as oppose to the optimum number of dealership in a 'good' economic condition of 150)
2) Compete with the under-declared imported cars
3) Shrinking Proton market share without any new saleable Proton model. (The proton Exora and Saga was only recently launched).

Proton dealers have a choice to either exit with the negligible compensation or to consolidate and become stronger or risk being terminated without any compensation. Either way, its a business decision that is not only affecting EDAM but the whole Proton network.

Nonetheless, EON Berhad and EON dealers agreement expires this year. Without renewing their agreement, Proton network is back at the optimum number of representation in the network.. but then again.. once a SUPER and now a Master, EON swam through their battle with Proton Edar and survived signing a new agreement.. but the fate of their dealers are still unknown.


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