Thursday March 3, 2011
Planned Nissan tie-up to help Proton save cost
By EUGENE MAHALINGAM
PETALING JAYA: Proton Holdings Bhd's endeavour to incorporate select technologies and manufacturing expertise from Nissan Motor Co could lead to potential cost savings in capital expenditure (capex) and research and development (R&D) for the national carmaker.
OSK Research said the memorandum of understanding (MoU) signed on Tuesday between Proton and Nissan to conduct feasibility studies to use the latter's platform and power train for upcoming Proton models would augur well for the national car company.
OSK said there was a strong possibility that the power train and platform would be for Proton's global compact car, Emas.
Slated for launch between 2012 and 2013, the report said it was also rumoured that the power train and platform for the Emas could potentially be the same one used by Nissan March or Micra models.
“We believe that using Nissan's versatile platform and power train for Proton's upcoming global compact car will lighten the national carmaker's capex burden, given that such an endeavour can be costly (at least US$150mil to US$200mil),” OSK said in a report yesterday.
R&D costs can also be trimmed by developing a car on an existing model platform compared with coming up with a new model from the ground up.
In a statement yesterday, Proton said the feasibility study with Nissan would focus purely on technology sharing and in the pursuit of global competitiveness.
“It significantly reduces the time required to develop new products, extends tremendous cost savings in terms of development, and provides greater flexibility in being able to spin off a variety of vehicles from a common set of components,” said Proton group managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir in the statement.
He said the collaboration would help accelerate the launch of Proton's next generation of vehicles and models that were being designed to appeal to a more diverse and broader market segment, both domestically and abroad.
The feasibility studies will commence from the date of the signing of the MoU and end on April 30.
Pending further details, OSK said it was maintaining its earnings forecast for Proton.
Proton's third-quarter earnings for the current financial year ending March 31, 2011 took a beating due mainly to higher branding costs and restructuring expenses incurred by its sports car division, Lotus Group International Ltd.
The national carmaker suffered a net loss of RM60.1mil compared with a net profit of RM79.68mil in the previous corresponding period while revenue slipped to RM1.83bil from RM2.01bil a year earlier.
There has also been speculation that Proton may offer Nissan Fuga as a replacement for its Perdana model. AmResearch said Proton would initially offer Fuga as a replacement for the Government's fleet of vehicles.
“The Nissan Fuga will likely be imported as completely-built-up units and Tan Chong Motor, as Nissan's franchise holder, will get a tiny cut from sales.”
It also said Proton could use Nissan's A-platform (a common platform for Nissan March) for its Emas model.
“We do not rule out the possibility of Proton paying royalties to Nissan and, in return, underwrite up to 100,000 units in sales volume,” AmResearch said, adding that Emas was initially targeted for the Malaysian and Indian markets.
The report said a target volume of 100,000 units per annum could lift Proton's plant utilisation rate to above 70% from 50% currently.
“Pricing of the model could be brought down to as low as Myvi's RM38,000 to RM52,000, given tax incentives, localisation and R&D grant provision.
“(The) Myvi generates sales of close to 92,000 per annum. This deal could mark Proton's turning point in penetrating into Perodua's key market segment and in regaining its market share domestically.”
AmResearch also noted that Nissan had a cross-shareholding with the Renault group of France.
“We believe Renault's participation in the deal could come in the form of diesel engine design and supply for Emas. Co-development should lower costs significantly and accelerate design to market process.
“Negotiations involve both product and marketing of models, and both parties are exploring ways to deepen such cooperation.”
The report also said usage of a common platform by Proton could pave the way for a strategic alliance with the Renault-Nissan alliance for the export markets, particularly via Renault, given the lack of A-segment models in its line up.
“Proton's Emas could plug Renault's gap in the small-car segment in India, given a different upper body (which will be designed by Lotus) and hence, different looks from the existing Nissan March.”