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Proton Holdings Berhad is short for Perusahaan Otomobil Nasional (Malay for National Automobile Enterprise), is Malaysia’s first car manufacturer initiated in 1983 by then-Malaysia’s Prime Minister Mahathir bin Mohamad. Proton is listed on the Bursa Malaysia.
Based on technology and parts from Mitsubishi Motors. production of the first model, the Proton Saga began in September 1985 at its first manufacturing plant in Shah Alam, Selangor. Initially the components of the car were entirely manufactured by Mitsubishi but slowly local parts were being used as technologies were transferred and skills were gained. The 100,000th Proton Saga was produced in January 1989. 
Until the end of the 1990s, the car’s logo featured the crest from Malaysia’s coat of arms, featuring a crescent and a fourteen-pointed star. The new Proton logo features a stylized tiger head.
In 1993, a model called Proton Wira was introduced based on the Mitsubishi Lancer/Colt. More than 220,000 units were sold between 1996 and 1998 . Proton Perdana based on the Mitsubishi Galant/Eterna. was first produced in 1995, intended for higher end market.
By 2002 Proton held a market share of over 60 per cent in Malaysia, which was reduced to barely 30 percent by 2005 and is expected to reduce further in 2008 when AFTA mandates reduce import tariffs to a maximum of 5%.
Proton Waja (Proton Impian in UK) is the first car model designed internally by Proton. It was launched on February 8, 2004.
With the acquisition of Lotus technologies in 1996 from Bugatti. Proton has gained an additional source of engineering and automotive expertise. This lead to the production of Proton Gen-2 which was code name Wira Replacement Model (WRM) before the launch. The Gen-2 is the first of cars to be manufactured and assembled at the new manufacturing plant in Tanjung Malim, Perak which is part of Proton City development project. The plant was opened in 2004. On June 8, 2005 Proton introduced the second model to be manufactured in Tanjung Malim, the 1,200 cc 5-door supermini, the Proton Savvy. Both the Gen-2 and Savvy, were models that MG Rover was looking to rebadge when the British firm entered into collaboration talks with Proton. However these joint-venture talks were unsuccessful and MG Rover subsequently collapsed.
In December 2004, Proton purchased a majority share in MV Agusta of Italy. MV Agusta is the manufacturer of MV Agusta, Husqvarna, and Cagiva motorcycles. A year later, Proton sold off its 57.7% share in MV Agusta to another Italian company for a token of one Euro. Due to heavy debt by MV Agusta, the selling enabled Proton to write off the losses off its book.
Drop of sales
In 2006, Proton’s sales dropped 30.4% from 166,118 in 2005 to 115,538 for the Malaysia market, with a later report indicating a 55% fall of sales to 962.3 million ringgit, its lowest in at least seven years. This allowed Perodua to overtake Proton as the country’s largest passenger carmaker for the first time, with a 41.6% market share, while Proton’s market share fell from 40% in 2005 to 32% in 2006. In the period ending December 31, 2006, Proton has also suffered three consecutive quarterly losses. Compared to a profit of 86.5 million ringgit in 2005, the car company lost 281.5 million ringgit in 2006. Proton blamed discounts from rivals. Total losses in 2007’s financial year climbed to $169 million.
Strategic Partnership with Volkswagen AG
In October 2004, Proton announced that an understanding has been reached with Volkswagen AG of Germany to establish a strategic partnership. Under the tie-up, the two carmakers are expected to exploit each other’s strengths. Proton would gain access to Volkswagen’s superior technical capabilities and technology. In return, Volkswagen may utilise Proton’s spare capacity at the latter’s Tanjung Malim to assemble cars for export to the South-East Asian market, where the German auto giant has a weak presence. Furthermore, the tie-up may see Volkswagen assist in distributing Proton vehicles in China while Proton does the same for Volkswagen in South-East Asia. Nonetheless, none of the parties announced detailed and concrete plans for the partnership. On January 13, 2006, Volkswagen announced that negotiation of the partnership has failed because VW’s plans were different and clashes with the terms and condition that Proton offered. .
Proton exports cars to the United Kingdom, South Africa, Singapore, and Australia and the company is aggressively marketing its cars in several other countries including the Middle East. In 2006, Proton successly exports 12,000 units of car around the world.
When the first Proton appeared on Malaysian roads, local wits promptly dubbed it (Proton Saga) the ‘Proton Harga’, meaning the cut-price’ Proton. And for good reason. The Proton was at least $1,000 cheaper than the equivalent makes in the same 1.3 to 1.5 litre class. With both the price and a dash of national pride working for it, the Proton got a rapid hold on the market. By 1988 the Proton had overtaken all other makes and grabbed 73 per cent of the passenger car market.
The only problem was that the market had shrivelled. Each year the pie shrank further, and the Proton’s share grew bigger. In 1983, when the ‘national car’ had been planned, Malaysia was selling nearly 100,000 cars a year and the market was growing annually by 20 per cent. The Proton plant was designed to turn out 80,000 units a year and could gear up to 120,000 units. But in the Proton’s first year of production, national car sales dropped by half to 47,000. The next year was worse – 35,000. Only last year did the market begin a slow pick-up to 54,000 units, by now most of them Protons.
Government policy has kept the Proton cheaper than other makes by the simple strategy of over-taxing the competition, leaving Proton as the one and only choice for the consumers. Duties on packages of parts for assembly into complete cars in Malaysia are around 150%. Proton is exempted from most of these.