Proton and Perodua Merger will Benefit Malaysia Car Industry

23 March 2011 - Datuk Seri Mustapa Mohamad, the Minister of International Trade and Industry announced that the study on the proposed merger between the 2 national car makers Proton and Perodua is complete and that such an exercise will surely benefit the 2 companies as it would help to solve the structural problem plaguing the local automotive sector.

He said that if these problems are resolved, then the local automotive sector would be able to compete as well as penetrate the international market. This he said would reduce the problems of fixed costs as well as optimizing production capacity. The proposed merger was first mooted and proposed by the Prime Minister Datuk Seri Najib Tun Razak at the Economic Council Meeting.

Since the announcement, the industry have been abuzz with talks and discussions on whether the 2 national companies should merge. Many are taking that such an exercise will surely benefit Proton more as they are struggling to keep pace with the industry while Perodua might not be too keen considering that they are the market leaders in the automotive setor.

Proton will do more good for itself than Perodua. Proton, via its top management, has expressed interest in a merger and the resulting benefits, while Perodua has done the exact opposite, saying that it prefers to follow its five-year roadmap that was planned with Daihatsu, its technical partner.

Ultimately, with Proton and Perodua both being government-linked companies, in which the government owns substantial stakes, will it actually matter what Perodua’s management has in mind? Or what consumers like us think? Probably not.