LOTUS AND MV AGUSTA WAS NOT A MISTAKE.

Image from Malaysia-Chronicle

I read with interest Mohd Khairil Azman posting in FMT at HERE that had gone viral and I made references in this article to his 3 questions but first let us go back to the fundamental of the national car project.

It is interesting to observe how Malaysia national car projects had evolved from first the Perusahaan Otomobil Nasional Berhad, PROTON in the early 1980s and then Perusahaan Otomobil Kedua Berhad (Perodua) in 1992. Both national car projects were mandated to achieve 1 clear objective; to be able to design, develop and produce our own car as part of our industrialization program to achieve the vision 2020.

Proton's journey has always been in that direction, Perodua which was also Tun Mahathir's project that was approved by cabinet in 1992 was given the same mandate as Proton. This was clearly stated in Tun Mahathir's speech as the Prime Minister then, when he launched Perodua manufacturing plant in Rawang; 2 years after the cabinet approves the 2nd national car project. Tun Mahathir's speech can be read at HERE.

With both Proton and Perodua non-competing in different category, there were sufficient sales volume for both companies to slowly acquire technology and engineering capability to achieve the government's vision and objective. With the proceeds received from those sales, Proton reinvested by acquiring technology through Lotus and MV Augusta and build its RM1.8 billion Tanjung Malim plant.

Proton acquired Lotus in October 1996, a year before we were hit with the worst recession in 1997 which halted whatever plan Proton had for Lotus. When the economy recovers, Lotus engineering has been part of Proton cars ride & handling but not many had driven the lotus to actually feel it in Proton. The Lotus engineering too is the catalyst behind the new engine nicknamed Volcano that was recently launched in January this year. (More information at HERE). Lotus was acquired for its engineering capabilities as well as support and it has contributed to the development of Proton cars. Whether Proton did have a turn around plan for Lotus cars itself remain unknown when the architect of its acquisition, Tan Sri Yahya Ahmad died of helicopter crash (more information at HERE).

PROTON, SuperCARS, SuperBIKES & SuperBICYCLES

1. Proton acquire Lotus technologies in 1996 from ACBN Holdings (a company owned by the owner of Bugatti), Proton has gained an additional source of engineering and automotive expertise.

2. Most of Proton customers and the public are aware of the branding LOTUS and have heard about the Lotus car. However from Proton network first-hand experience, less than 10% of Proton customers really understand the LOTUS DNA in proton cars except for the RM5 logo bearing “handling by Lotus” on Proton Cars which is the main selling point. Once you have driven a Lotus, then you will understand the meaning of Lotus handling but how many of Proton customer had ever driven a Lotus?

3. With the acquisition of Lotus, the public were told that the Lotus cars will be available at selected dealer showroom. Proton dealers were then told to upgrade their showroom and the dealers will be allowed to sell the Lotus as part of Proton varieties. There were no dealer that were allowed to displayed and sell the Lotus although some dealers had invested to upgrade their showrooms in anticipation of displaying and selling the Lotus.

4. Pursuant to the Lotus acquisition, Proton embarked in Proton bicycles and all the dealers were forced to sell Proton Bicycles. Proton Bicycle was a failure and many dealers bought the bicycle stocks for own use instead, to comply to Proton requirements.


5. In December 2004, Proton purchased a majority share in MV Agusta of Italy at 70 million Euro. MV Agusta is the manufacturer of MV Agusta, Husqvarna, and Cagiva motorcycles.

6. The Lotus cars were never displayed and sold at the Dealers showroom although some dealers had renovated and upgraded their showroom to sell the cars and the Proton Bicycle which ended up being a liability to dealers, it is safe to assume that Proton dealers will be selling the Proton Superbike with the MV AUGUSTA acquisition in 2004. Thank god it never materialised.

7. There are still a lot of complain on the quality of Proton Cars, even on the 20 years old saga before it was phased out and replaced. Rather than venturing and diversifying into supercars, superbikes and superbicycles that all have a very niche market, Proton resources should be channel towards meeting the need of the mass public such as quality, affordable range of cars without subsidy, grant or tax/custom excise waiver from the government.

8. However, buying the technologies in the Supercar Lotus, Superbike MV AUGUSTA and Superbicycle T-bikes is a business decision and I am sure the Advisor, Chairman and Board of Directors, the Managing Director of Proton (at the time the deal were signed) are aware of the business opportunities from these super-technologies. But once the Super-dealings have been concluded, to dispose-off the superdealings such as MV AUGUSTA for RM5 (or 1 EURO dollar) is insane and out of the mind.

9. Even if the new shareholder of Proton and its new Board and management are streamlining their products and services, selling their RM350m investment in MV Augusta for 1 Euro is absurd and ridiculous. The sales of MV Augusta for 1 EURO can only be agreed upon by either an incompetent advisor (CSFB or Proton Chairman & its board) or by some ‘interested party’.

10. The MV Augusta had proven to be a wise investment when part of MV Augusta, were sold for RM1.06 billion.

11. I support TDM’s and call for the Securities Commission, the ACA or any MPs to raise in Parliament, to investigate the transaction.

12. The public are concern with the quality of the cars as well as the future of Proton. These internal issues if not resolved, will affect the people working at the proton and its value chain. Their motivation will be affected by the alleged corruptions that will eventually affect Proton's quality, healthy production and sales.