Troubled national carmaker Proton went into the red with a RM12.35 million net loss in the three months to June, from a profit of RM166.47 million a year ago.

Proton blamed its poor performance on lower sales, rising component costs and higher allowances for doubtful debts.

In the results posted late yesterday it also predicted more tough times during the remaining three quarters of its financial year.

"The (Proton) group expects the higher component cost arising from higher steel and oil prices to have an adverse impact on margines," it said.

"Intense competition in both the domestic and exports market is expected to put additional pressure on group sales."

Proton used to sell six out of 10 new cars in Malaysia but sales have been tumbling for the past few years as it feels the bite of growing foreign competition as the government whittles away protection.

From a market share of 60 percent in 2002, Proton saw a decline to 48 percent in 2003 and then 44 percent in 2004.

The company said it would "continue to focus on defending domestic market shares while promoting export growth."

"Continuous efforts are also directed at improving quality, enhancing cost competitiveness and introduction of new models to mitigate the impact of increasing competition and higher costs," it said.

Latest blow

The financial results were the latest blow for the embattled company which has been making front pages for months.

Heated debates over the level of protection the automaker should receive erupted in May, when then-chief executive Mahaleel Ariff said Proton had been "poorly treated" by the government.

Trade Minister Rafidah Aziz retorted by attributing the company's poor performance to shoddy quality and a lack of competitiveness.

Her remarks sparked a public war of words with former premier Mahathir Mohamad, who helped to launch the company and remains its adviser.

Mahathir said Proton was being undermined by underpriced foreign cars flooding Malaysian markets through what he alleged was the indiscriminate issuing of vehicle import permits to privileged individuals.

Proton will be at the centre of a highly-anticipated national auto policy to be released next month, chaired by a committee which Prime Minister Abdullah Ahmad Badawi is chairing personally.

The committee will revise Malaysia's vehicle imports system and protect Proton's status as a national car, the government has said.