More than 100 Malaysian parts suppliers and vendors affiliated with Proton are reportedly facing a severe financial strain due to escalating operational expenses as a result of dwindling orders, the New Straits Times reports.
The situation has prompted the Proton Vendors Association (PVA) to reach out to the national automaker, asking it for help in addressing the challenges vendors are encountering. However, the automaker has shown no willingness to address the issue, according to Datuk Liu Guoquan, president of the Malaysian Fujian General Chamber of Commerce.
He said that numerous suppliers and vendors are currently grappling with financial distress, primarily due to dwindling orders recently. He attributed the root cause of the issue to Proton’s failure to fulfill the promised quantity of parts orders for its X50, X70 and X90 models, which had resulted in a 30 to 50% reduction in parts production output.
Echoing these sentiments, an anonymous supplier disclosed that while the original contract from Proton promised to obtain the supply of parts for 1,500 units of the X90 per month, the actual monthly order volume was only between 200 and 300 units.
As a result of this shortfall, Liu said many vendors are experiencing financial losses, forcing some to cease operations altogether. He added that if the situation persists, it could lead to the collapse of many suppliers, affecting around 50,000 employees across the automotive industry chain.
He criticised Proton’s decision to eschew competitively priced locally-assembled (CKD) parts and instead source them from China, citing the reluctance of Malaysian suppliers to reduce prices as the rationale behind this move. Liu said such actions have further strained the relationship between Proton and the vendor association.
In response to the news report, Proton has issued a statement on the matter, printed in full below:
Proton would like to address recent media reports highlighting challenges faced by vendors associated with the company.
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.
The post Proton suppliers claim to be struggling as company sources parts from China – Proton issues statement appeared first on Paul Tan’s Automotive News.
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