Discounts Today, Disruption Tomorrow Warns Proton To Policymakers

Proton’s Deputy CEO Roslan Abdullah expressed concern about the ongoing automotive price war in Malaysia, driven largely by the influx of new Chinese automotive brands. 

He warned that while major discounts may be attractive to consumers, they are beginning to have a ripple effect that threatens the health of the local automotive ecosystem - particularly towards local Original Equipment Manufacturers (OEMs).

“Larger vendors may survive because they work with multiple brands. But smaller vendors who depend solely on one carmaker could be in trouble,” Roslan noted.

He explained further that aggressive price cuts are not only making it difficult for local manufacturers to stay competitive, but they are also distorting the used car market.

As sharp drops in new car prices push down overall resale values, consumers become hesitant to trade in older vehicles, preferring instead to wait for further discounts or opt for new cars that suddenly appear more affordable.

“Take a car that was originally sold for RM100,000. If it’s suddenly dumped at RM80,000 due to discounts, the resale value will surely take a big hit,” he said. Lets not forget the initial buyers who’s cars are automatically devalued by the brands and not market forces. 

According to Roslan, local OEMs like Proton face significant challenges in responding to such aggressive pricing tactics. Unlike foreign brands, many of which import vehicles either fully (CBU) or in semi-knocked-down (SKD) form, Proton relies heavily on local suppliers and production facilities. This means higher operational and production costs, with less flexibility to slash prices.

“In Proton’s case, we have to keep the business sustainable. Big price drops simply aren’t feasible,” he explained. Instead, Proton focuses on remaining competitive through promotional campaigns - offering cash rebates or value-added accessory packages.

Roslan also emphasised Proton’s role as a major employer, with over 7,000 direct employees and another 5,000 supported through its nationwide sales network. In this light, maintaining long-term profitability and sustainability is key.

He pointed out that many of the foreign brands engaged in the price war have made minimal investment in Malaysia’s automotive ecosystem, relying on imported CBU or SKD models. This allows them to keep costs low and offer steep discounts, creating immense pressure on local players who have committed significant capital to build domestic production capabilities.

While acknowledging that foreign direct investment (FDI) is important for the nation’s growth, Roslan called for a policy reassessment of how current market dynamics are impacting local industry players.

Though not directed at any particular government agency, his remarks appear aimed at the Ministry of Investment, Trade and Industry (MITI), which in recent years has allowed numerous Chinese brands to enter the Malaysian market.

So far, only a handful — such as Chery, GWM, and GAC — have established their own Completely Knocked Down (CKD) facilities. Others, like BYD and Tesla which heavily resort to price cuts to push sales numbers, continue to operate using the CBU model.

Source: Berita Harian