Proton Cars (UK) and Lotus poised for a brighter future

10 May, 2004

(Daily Express is the independent national newspaper of East Malaysia)

NORWICH (United Kingdom): If the latest indications coming out of Proton Cars (UK) Ltd and Group Lotus plc - the two entities owned by Perusahaan Otomobil Nasional Bhd (Proton) - are anything to go by, then perhaps the many doomsday trumpeters and pessimists may be disappointed.

According to Brian J. Collier, managing director of Proton Cars (UK), the UK car retailer is bracing for higher sales now that the Gen.2 has been launched and that the Satria Replacement Model (SRM) and Tiara Replacement Model (TRM) are going to be available towards the end of the year or early next year.

And James Stronach, finance director at Group Lotus, says the company has turned the corner and is looking at brighter horizons ahead.

Proton Cars sold about 2,300 cars in the year ended March 31, 2004 and the current year’s sales look set to improve to about 6,000 cars with the full year’s sale of the Jumbuck, the sub-one tonne pick-up truck (known as the Arena in Malaysia) which was only introduced in July 2003 and with the availability of the new Gen.2, said Collier.

At 2,300 cars, Proton Cars only has a 0.15 per cent of the total UK market of about 6.5 million vehicles and 0.25 per cent of the UK’s private car buyer market. (Proton does not compete in the fleet market because it is unable to give massive discounts like the UK-based manufacturers like Ford and only concentrates on the private car buyer’s market).

Over the longer term, Collier sounded more optimistic and said, We believe we can do 20,000 cars a Daihatsu and Suzuki. If we go back to 1990, we had 16,000 units, we have had the experience to do it.

With the Gen.2 to be available from July, we believe we can do better.

“What we lacked in recently were (new) products that were coming in. At (the projected) 20,000 units, that will give us 0.8 per cent of the total UK market and 1.8 per cent of the private buyers market, that’s where we are aiming for.”

Proton, he said, had slackened in recent years because of the lack of new models to compete in an ever-changing market. In 2003, over 200 new models were launched in the UK and this meant that a car was launched every other second day.

“In view of the ever changing market, that drives the (car model) cycle changes and so you have be in and out quickly,” said Collier, adding that the trend in the UK is towards five-door cars, people carriers (MPVs) like Citroen Picasso and small niche cars like Ford Ka, Peugeot 307 and Suzuki.

“More and more people are looking at lifestyle type of cars,” he said, saying that if a car buyer bought an MPV, it does not mean that he is going to bring his vehicle to the rugged terrain or have seven people to transport all the time.

“More and more lifestyles cars are replacing the traditional type of cars because they look different, and people pay for that in Europe...just to be different. Again it’s a lifestyle (thing) and so manufacturers are moving very quickly to launch a vehicle like the Citroen C3, which is different and they can actually get a higher price for it,” he said.

As for the four-door Waja, known as the Impian in the UK, Collier said although it is a very good car with a good package and specifications, four-door saloons are not in vogue here and only appeal to the more traditional buyers, whereas in the other end of the spectrum of four-door market are the BMWs and Mercedes-Benzes.

Proton Cars (UK), he said, recently re-positioned the Impian and is getting fairly good sales, mostly from traditional buyers who still like four doors.

Given the dynamics of the market, Collier believed that the sporty-looking five-door Gen.2 would have strong appeal in the UK and would make a big difference in terms of sales for Proton Cars (UK) while the potential from the trendy-looking SRMs and TRMs, now in the pipeline, looks pretty good.

For example, he said “the TRM sits in a segment where 850,000 cars are sold each year, which gives us a real opportunity to really go for it. That car is in the right segment, right time, it’s up to date and competitive, that’s all we need, we need (new) products.

The other factors that would Proton Cars (UK) would be in terms of customer service, said Collier, adding that What Car magazine and JD Power had recently ranked the company high in terms of customer service and repairs, and this would help Proton in a highly-competitive market.

In addition, he said Proton’s joint sponsorship with Lotus of the Norwich City Football Club, which would be moving into top flight soccer the next season when it plays in the English Premier League with the likes of Arsenal, Chelsea and Manchester United would give Proton greater exposure.

This season alone, some 15 million people had watched Proton’s brand name on TV and some 500 newspaper and magazine articles had been written about Proton’s involvement in English soccer.

Stronach of Group Lotus said it had put behind its problems, both in finance and manufacturing, and is now on a steadier footing.

After three years of good profit between 1998 and 2000, Lotus went into a slump with losses in 2001 and 2002 because of manufacturing problems and the downturn in the engineering consultancy business.

It turned the corner for the year ended March 31, 2003 with an operating profit of 4.3 million pounds sterling and this improved to 5.1 million pounds sterling in the year just ended.

For the current year, it is optimistic of much improved numbers, now that it is going to export the Lotus Elise to the United States from this month. Clive Dobson, manufacturing director of Lotus Cars, the car manufacturing arm of Group Lotus, said the company has been producing some 2,500 hand-built cars annually in the last two years but this is going to pick up to between 4,000 and 4,500 cars annually from this year, especially with the pent-up demand from North America, which accounts for half of the global sports car market.

He explained that Lotus Cars had not been able to export the Elise to the US earlier because it had to comply with certain specifications peculiar to that market.

Dobson said the US version of the Elise was launched at the Los Angeles Motor Show late last year and received rave reviews. Orders have started flowing in and all the company’s production for this year has been sold out, he said.

He also said the introduction of two new models - the Elise IIIR and the Exige - earlier this year had received good response and are expected to drum up better sales for the company.

As for Lotus Engineering, Bill Williams, head of strategy at Group Lotus, said revenue from this division for this year is forecast at 100 million pounds sterling and 90 per cent of its work is for external clients.

The division employs about 840 people in the UK, Germany, the US, China and Malaysia.

He said the Malaysian facility is the fastest growing unit within the division because of increasing project workload and its just-opened facility in Shanghai is expected to see a lot more business because of the potential of China’s growing automobile industry. - Bernama