Proton had been losing its market share at the time when auto sales in this country had hit an all time high of 487,605 units last year. Imported cars have made significant headway with their sales increasing by 42.4% whilst Proton managed to increase its sales only by 11.7 %.

With a market share that had shrank from 48.5 % to 30.7 %, Proton sold fewer cars in 2004 as compared to 2003.At the same time, Proton announced that it has increased the prices of its Perdana and Gen 2 models.

Unless these new prices are accompanied by improved packages for prospective customers, chances are that its market share will continue to dwindle during the current financial year.

On scrutiny, we find that only 20% of the RM 2.5 billion facility at Proton City in Tanjong Malim has been utilised thus far. Proton is reliant on imported critical parts, such as cylinder heads, which are

imported from Australia and South Korea whilst the engine blocks are die cast in an associate company in Japan.

All these translate into high cost due to high overheads and high cost of imported parts, especially with the ringgit being undervalued.

The competition, particularly the Japanese makes, source their competing models from Thailand. South Korea (Hyundai, Kia, Sangyong) embarked on an aggressive market penetration strategy during the last five years by offering new models incorporating advanced technology at very competitive pricings.

This yielded them significant gains in market shares. Chevrolet, a brand name of General Motors, is also sourced from low cost country of origin - South Korea. All of these names carry with them strong branding that enjoys strong and increasing market shares in the international market.

They offer several models with the latest design and technology in the lower and middle market ranges. This is in contrast to the limited, dated or unproven models offered by Proton.

We also note that cash reserves of about RM6 billion that Proton used to show in its balance sheet has now dwindled to RM2 billion. This is a cause of concern, as in the past interest earnings used to contribute significantly to Proton's bottom line.

The bulk of Proton shares is tightly held by government-linked fund managers with minimal foreign holdings. The price is fiercely defended at the RM8.50 level. This is reflective of the original purchase price paid by these fund managers plus some holding costs.

Under the new accounting standards, all investment portfolios available for sale must be marked to the market to prevent a bad hit to their bottom lines.

With these developments, one begin to ask whether this is the beginning of the end for Proton. Indeed, it has graduated from being an albatross to a lame duck, which very soon will be just right for the dinner table.

From the above we begin to appreciate why Proton's advisor, former prime minister Dr Mahathir Mohamad has now joined the chorus for the re-pegging the ringgit.