PEDA ADVOCATE AGAINST TERMINATION OF DEALERS

PROTON EDAR DEALERS ASSOCIATION MALAYSIA
Press Release

“PEDA ADVOCATE AGAINST TERMINATION OF DEALERS”

FEBRUARY 2009, KUALA LUMPUR. “We acknowledged that Proton sales network is over-congested but termination of dealers for lack of sales performance should not be an option.” said Armin Baniaz Pahamin, Acting President Proton Edar Dealers Association Malaysia (PEDA).

1. The over-congestion of dealers in the network was a result of previous Proton management political move in anticipation of terminating EON. In an unprecedented move, Proton appointed more than 100 dealers between the year 2003-2005.

2. Potential dealers went through various stringent screening prior to being appointed. Dealers were also requested for a minimum paid-up capital requirement of at least RM1million as a pre-appointment condition.

3. Dealers are businessmen who invested their life-time savings, pension fund and took borrowings to operate their business. More than half of the minimum paid up capital are invested to comply to Proton Corporate Image renovation for the showroom. Dealers requires RM3million to operate the dealership effectively and the balance working capital are satisfied by bank borrowings.

4. A 3S dealer employs more than 30 staff including the sales & service personnel.

5. When Proton failed to terminate EON, there were more than 400 dealers in the network. The growth of passenger car sales in Malaysia had always been stagnant but Proton dealers had doubled resulting in a drop of total Car sales per dealer but with an increasing cost of operation over the years.

6. At the same time, Proton dealers had to previously compete with the under-declared imported cars which further dampened Proton sales.

7. Proton more than a year inconclusive negotiation for Foreign Partnership had also slowed down proton sales when the public awaited new product line-up which saw dealers accumulating more losses.

8. Currently, with more than 300 dealers in the network, the average sales per dealers are less than 30 cars per month whilst Proton owned branches selling an average of 100 cars.

9. Dealers in klang valley can only break-even with a minimum car sale of 45 cars per month. With more losses accumulated by most dealers, the affected dealer will cease to be a dealer naturally when they no longer able to sustain their business.

10. Even PEDA president, Haji Wan Sepwan, surrendered his dealership in January 2009. Haji Wan Sepwan surrendered his dealership after many years of struggle battling unfair trade practices internally within proton and externally with adverse trade condition.

11. Dealer’s current overall lack of sales performance was the chain effect of Proton previous management incompetency in appointing too many dealers.

12. Proton Chairman, Dato Nadzmi’s move to rationalize the network is fair with Proton reducing their branches too. However, dealers should be allowed to retire instead of being terminated especially when their lack of sales performance is beyond their control.