Proton has lost a great deal of money over the past year, and on Thursday evening it was revealed that the Malaysian automaker has probably lost its best chance for a rescue as well.
After Proton posted its fourth consecutive quarterly loss, Malaysia Prime Minister Abdullah Ahmad Badawi confirmed Germany’s
Badawi said Volkswagen was no longer interested in taking an equity stake in Proton, which is 43% held by state investment firm Khazanah Nasional Bhd, and the Malaysian automaker needed to turn elsewhere.
"They have to turn around. They cannot be going on making losses," the prime minister said after chairing the monthly UMNO Supreme Council meeting in Kuala Lumpur on Thursday.
The national carmaker posted a net loss of 913,000 ringgit ($268,653) in its fiscal fourth quarter, which ended in March. It brought Proton a full-year loss of 591.3 million ringgit ($174 million), a reversal from a net profit of 46.7 million ringgit ($13.7 million) in the previous fiscal year.
The country’s largest car maker saw its sales fall 40% from 183,824 units to 110,358 units last year.
Proton’s full-year net loss was 40% more than Merrill Lynch’s estimate.
The investment bank is forecasting net profits for the coming two financial years of 231 million ($67.9 million) and 274 million ringgit ($80.6 million) due to two new models, Gen 2 sedan and BLM, and an ongoing restructuring.
Nevertheless, Merrill Lynch retained its sell call on the company. “The absence of a foreign partner continues to cast a dark cloud over Proton’s long term survival. We view the initiatives [to improve sales and lower costs] initiated by management as a stopgap solution, at best,” it said in a research notes Thursday.
Set up in 1983 under the direction of former Prime Minister Mahathir Mohamad with Japanese partner
Having relied deeply on Mitsubishi, Proton foundered in its attempts to design new models after it ended its partnership with the Japanese automaker in 2004.
Proton’s market share in Malaysia has dropped sharply from over 60% in 2002 to barely 32% in 2006, allowing Perodua to overtake it as the country’s largest passenger carmaker for the first time.
The talks with Volkswagen appeared to be in trouble in March, when they passed a deadline set by the government to conclude a partnership. (See “VW Said To Walk Away From Deal With Proton”)
It earlier conducted talks with