Proton responds to Vendors Association's accusations - acknowledges their challenges, ready to discuss

KUALA LUMPUR: Proton has expressed its openness for discussions and close collaboration with the Proton Vendors Association (PVA) to address supplier issues following reports of financial difficulties faced by suppliers.

Proton is ready to engage with PVA members, acknowledging the challenges they encounter. In a press statement, Proton emphasized that thorough discussions are challenging without clear evidence from the involved suppliers about the issues they face.

" At Proton, we create an equitable and respectful business environment with our partners built on our unwavering commitment to fair and firm business dealings.

To achieve this, we collaborate closely with the Proton Vendors Association (PVA), the official representative for all 116 Proton vendors, having frequent discussions and joint initiatives that are mutually beneficial.

We understand there are difficulties faced by some vendors and our doors are always open to engage in equitable discussions with all PVA members, except those who are unable to provide clear evidence regarding the issues faced.

It is important to highlight proton has a history of open and constructive dialogue, and we remain dedicated to continuing with this approach for the long term.

We recognise the importance of resolving these matters quickly by working closely with all parties involved and invite engagement via official channels to resolve them at the appropriate time,” Proton stated.

The national car distributor also mentioned its long-standing practice of open dialogue and its application to current times.

This response from Proton comes two days after the President of the Malaysia Fujian Business and Industry Council, Datuk Low Kok Chuan, reported that over 100 Proton Holdings Bhd spare part vendors are facing severe financial pressure due to increasing operational expenses.

Despite the Proton Vendors Association (PVA) reaching out to the national car manufacturer to address these challenges, their appeals have been overlooked.

Low highlighted that many suppliers and vendors are struggling with financial issues due to a recent decrease in orders, leading to an unsustainable business environment. He warned that if this situation persists, it could result in the downfall of many vendors, affecting thousands of workers across the automotive industry's supply chain.

He attributed the main cause of Proton's failure to meet the promised spare part order quantities for the X50, X70, and X90 models, leading to a significant reduction in production by up to 50 percent. As a result, many vendors are experiencing financial losses, forcing some to cease operations entirely.

Low also stated that the hardship is not only affecting the vendors' production capabilities but also hindering their capital investment, expansion plans, and human resource strategies.

Despite facing significant losses, Proton has shown little willingness to address the issue. Furthermore, he criticized Proton's decision to import competitively priced Completely Knocked Down (CKD) spare parts from China, citing Malaysian vendors' reluctance to lower prices as the rationale behind this move.

Such actions have further strained the relationship between Proton and the vendors' association. Highlighting the plight of small and medium enterprises (SMEs), Low emphasized that the surge in electricity bills and the government's announcement to increase the minimum wage to RM1,500 starting July 1 last year have worsened the financial problems of suppliers.

Echoing these sentiments, an unnamed vendor revealed that despite Proton's initial agreement to supply spare parts for 1,500 cars each month, it has dropped to just 200 to 300 cars a month.

This significant shortfall in spare part orders has resulted in financial losses for vendors, burdened with expenses related to production machinery, labor, and other overhead costs.

This is just the latest saga in Proton's parts supply and vendor issues at various points in its history. 

Howwever, such issues are not uncommon in the automotive industry, particularly for companies undergoing rapid growth, changes in ownership, or shifts in strategic direction.

Throughout its history, Proton has made efforts to address these concerns by improving supply chain management, enhancing quality control measures, and fostering closer relationships with suppliers. The introduction of new models and the adoption of international manufacturing standards have also been part of Proton's strategy to improve overall product quality and reliability.

In recent years, Proton has focused on strengthening its partnership with suppliers and vendors to ensure a more stable and efficient supply chain.

Collaborations with international partners like Geely was supposed to help in adopting best practices in supply chain management and parts sourcing, aiming to reduce the impact of such issues on production and delivery times.

Despite these efforts, challenges related to parts and supply chain logistics can periodically arise, influenced by various factors like changes in demand, production adjustments, and external disruptions in the global supply chain.

Proton's openness to discussion and collaboration with its vendors, as highlighted in recent statements, reflects an ongoing commitment to addressing and mitigating these challenges.

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