Prime Minister Najib Abdul Razak has insinuated that his predecessor Dr Mahathir Mohamad was responsible for existing problems in Proton Holding Berhad, a company which Najib claims needed to be rescued from an “unsustainable” business model.

Without naming Mahathir, he said the "chief tester" for the automobile company lacked an appropriate commercial understanding of the industry. 

"The reality has dawned on almost everyone; namely, that the business model (of Proton) was, and always has been, unsustainable in the long run. 

"For far too long, the unrealistic dreams and lack of commercial understanding of its former chief tester were indulged, " Najib said.

Elaborating further, he said Proton had been using the older models of Japanese cars which were customised to suit local preference, even after the automotive industry was liberalised.

"This rebadging or 'badge engineering', initially worked well for Proton as it secured a lion’s share of the market via some very popular models, namely the Saga, Wira, Perdana and Satria.

"But as the industry liberalised and protectionist policies slowly removed, Proton found it difficult to compete," Najib said.

While other carmakers were selling million of cars annually, he said, Proton only sold 72,000 units in 2016, giving it barely 12 percent share of the local market.

"Yes, Proton was in trouble and the government was called upon to help the firm, which resulted in the soft loan we extended in 2016," he said, adding that was the reason the government gave a RM1.5 billion loan last year.

Najib told this to a packed room today at the signing of the definitive agreement by DRB-HICOM to sell off 49.9 percent of Proton's stake to China's Zhejiang Geely Holdings Group for RM460.3 million.

Mahathir had previously claimed that he was the "chief tester" for Proton cars. 

“I was the ‘chief tester’ of all Proton cars when it was developed and marketed. I always use Proton cars for tests, and I drive all Proton cars each weekend myself," Mahathir said. 

Najib added that the “chief tester” would still prefer Proton to be 100 percent Malaysian-owned and lose hundreds of millions of ringgit a year. 

"But that is the people’s money, and it would have been irresponsible for us to continue with a business model that was never going to succeed," he said.

Describing the deal as a new chapter in Proton's journey, Najib said Proton, which will become Geely's right-hand-drive hub in Asean, will be able to expand to a bigger market which recorded 3.2 million annual car sales.

The Tanjung Malim plant will soon see Volvo cars being assembled here, he added.