Proton needs to learn attitude from Hyundai

Paul Tan

Modified 29 Jan 2008, 10:21 am

Hyundai builds four million vehicles annually today. By 2007, output is expected to be 5.5 million vehicles. Proton? Production is now shy of 200,000 cars a year. 178,431 sounds about right. Perodua? 113,431 vehicles.

This is why Proton has no chance to give us good cars at fair prices. There are no economies of scale. How did Hyundai do it? They've been around since 1967. That's 38 years. Proton? About 20 years. It was born in 1983. The first Proton Saga rolled off production lines in September 1985.

Even the local market share that Proton holds is dropping so how can it compete internationally? Let's all face it. If Proton-made cars that did not fall apart once they rolled off the production line, people would not turn to Korean makes.

If Proton's quality was comparable to Korean makes like Hyundai, would anyone still choose a Korean make? Can they voice out? Any particular reason?

Right now Proton is still in the middle of controversy and without a CEO , while Hyundai is gunning for Volkswagen and DaimlerChrysler, aiming to pass them and be ranked fifth on the chart of the world's five largest automobile makers.

This vision despite its income dropping and prices rising because of the rise in the Korean Won versus the US dollar which make Hyundai cars more expensive.

With the protection given to Proton here, even before Proton is successful they have gotten lazy. They simply do not listen to consumers. The opposite is with Hyundai, where its chairman follows the advice that JD Powers III himself had given him in 1998.

One of the points Powers had mentioned was that Hyundai was not listening enough to customers, and quality levels were an issue. Hyundai chairman Chung Mong-Koo swore that the six-foot board with the advice plastered on it would not come down until Hyundai surpassed Toyota in quality control.

Is he working at it? Yes. Hyundai defects rates have dropped from 272 problems per 100 vehicles in 1998 to just 117 per 100 vehicles in 2004. Hyundai has penetrated even the China market successfully.

In the Chinese market, Beijing residents can be seen to ignore China's own Charade taxis manufactured by Tianjin FAQ Xiali Automobile Co. They wait for a Hyundai Elantra taxi to pass by.

Hyundai is in Japan, selling its cars via Mitsubishi dealerships. Hyundai is in India, where it is the third largest automobile maker there. A Euro1.1 billion factory is being built in Slovakia for Kia, while in Malaysia we still talk about how Proton managed to build a RM1.8 billion factory without getting help from the government.

Chung is known as the 'Tiger' among Hyundai employees as he inspects Hyundai assembly lines every morning and scolds workers personally when he finds defects on cars being assembled. In Malaysia, we only have a tiger on the Proton badge.

So what happens when Proton drivers send their cars back when they find defects? They hear 'Biasa lah, Proton' from the service centres. You can see the huge difference in attitude between Hyundai and Proton.

Hyundai's manufacturing methods have top-down control exercised through personal relationships instead of formal bureaucracy. But Hyundai's struggle is not over yet. Its survival in the international market depends on how it positions itself despite the strengthening Korean won which are driving up the prices of its cars.

So really, what is the Korean advantage? I'd say it all boils down to attitude.