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NEWS UPDATES 10 July 2010

Right time to merge auto companies, The Straits Times reports

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It is the right time now to undertake the process of consolidation among local automotive companies, especially if there is overcapacity in the industry.

Proton Group Holdings Bhd managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir said consolidation is a normal process in other countries.

"I feel now is the right time for it to happen. It is a good thing and will certainly make our automotive industry more competitive," he said.

He said this in response to Prime Minister Datuk Seri Najib Tun Razak's comments last night that local automotive companies should consider mergers, if overcapacity happens in the industry, to continue progressing.

The Prime Minister said only companies that were innovative, willing to make changes and have a sustainable business plan, will truly succeed in this 21st century.

Proton, which celebrated its 25th anniversary last night, has to date produced more than 3.3 million cars. It has also created job opportunities for more than 30,000 individuals and 1,842 professionals while assisting 212 local vendors.

"At present, our task is to discuss with government authorities, the ways and means to consolidate. I feel, if all of us,are willing and ready to discuss, maybe the consolidation can be realised," said Syed Zainal.

However, the process of consolidation will eventually involve many parties and it is very important that all concerned, sit down for a discussion and find ways for the said proposal to happen.

"We cannot think of ourselves as I feel it is important to the country, the government and the industry. I think a number of parties have to sit down together and hopefully, we can come out with a solution on how to consolidate," Syed Zainal explained.

Meanwhile, the president of the Malaysia Automotive Association (MAA) Datuk Aishah said the idea of consolidation is good but it is up to the industry stakeholders to decide.

She said, the problem of overcapacity is only for Proton as the other manufacturers, are operating to meet demand.

According to CIMB-GK Research Pte Ltd (CIMB Research), Proton has the capacity to roll out one million cars annually through its manufacturing facilities in Shah Alam and Tanjung Malim but this has been underutilised.

The research house said the national car manufacturer's export plan is likely to fill up the capacity.

Up to May this year, Proton had sold 156,653 units on the local front, surpassing its target of 155,000 units.

Meanwhile, exports jumped from 17,000 units in 2009 to 25,000 units up to May this year.

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