Wednesday, April 6, 2016

The Proton willing buyer, willing seller situation 

Salleh Said Keruak 

Tun Dr Mahathir Mohamad has asked Malaysians to help Proton. Proton is not government owned but private owned. Mahathir, however, wants Malaysians to help Proton as a sort of national service or as a mark of patriotism. 

Personally I have no argument with this. After all, I am as Malaysian as Mahathir is and anything that helps keep Malaysia’s flag flying high I would be most supportive of. 

But then we need to understand that buying a car is not about nationalism or patriotism. It is about spending sometimes up to half your monthly salary (instalments, road tax, insurance, fuel, toll charges, parking fees, service, etc.), not including the depreciation, which can be as high as 20% the instant you register your car and drive it out of the showroom. 

So when someone buys a car it all boils down to just one thing, value for money, and whether later you can recover as much as possible from your investment when you decide to sell or trade-in your car. And a car is the worst investment you can own because it depreciates the instant you buy it and you loss more money every day you hold on to it. 

So ultimately the issue of market forces and the law of supply and demand dictates what you do. If there is a demand then you create the supply. But you cannot create a demand by asking Malaysians to buy your product just because they are Malaysian and Proton is also Malaysian. 

Sweden did not ask the Swedes to buy Volvo to prevent the company from being sold to the Chinese. Britain did not ask the British to buy Mini to prevent the company from being sold to the Germans. And the current problem the British government is facing is that three Tata steel factories (which are losing RM6 million a day) may be closed in the UK resulting in the loss of 40,000 jobs because people prefer buying cheaper steel from China. 

This is all about willing buyer, willing seller. But when the buyer is not willing then there is nothing the seller can do. Unfortunately, competition and globalisation have turned the world into a buyers’ market. That, basically, is what Proton is suffering from and not due to lack of nationalism and patriotism on the part of Malaysians. 

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