PROTON TO GO DEEPER INTO IRANIAN MARKET

From Abdul Muin Abdul Majid

TEHRAN, Dec 24 (Bernama) -- Malaysia's Proton Holdings Bhd aims to push
5,000 Proton vehicles in the Iranian market this year, 10,000 in 2009 and work
its way to eventually reach 50,000 units beyond that.

Its managing director Syed Zainal Abidin Syed Mohamed Tahir said Iran
represented a big potential for Proton, with the total industry volume in this
Islamic republic of 70 million people hovering at about 1.4 million cars a year.

"The car-per-population ratio here is about one to 10, so there's still a
long way to go in terms of maturity. Obviously it's matter of giving the right
products to the right market. If you look at, say, only 10 percent of the
market share, that's already 140,000 cars," he told Malaysian journalists
covering the visit of Prime Minister Abdullah Ahmad Badawi to Iran.

On Tuesday, Abdullah witnessed the signing of an agreement between Proton
and its Iranian partner, Zagross Khodro, for the supply of automotive parts that
allows the latter to assemble the Proton Gen.2 model through a completely
knocked-down (CKD) arrangement.

The first production of the model is expected to start in April 2009 at
Zagross' vehicle assembly plant in Borujerd city, southwest of Iran, with a
production capacity of 25,000 units per year.

"Right now we don't have any investment (in Iran). We provide the technical
support for the assembly, the training. But I think in the long term, we have to
see whether there is any opportunity for us to invest in Iran," said Syed Zainal
Abidin.

Touching on Proton's presence in this country, he said: "So far we have CKD
for the Wira and the Gen.2 is the next step. Going forward, we hope to introduce
the Saga and Persona models next year."

The Proton Waja, called the Impian here, can be seen roaming the streets of
Tehran as taxis.

Syed Zainal Abidin said plans were also afoot to introduce the CKD version
of Proton MPV in Iran by 2010. The MPV will be launched in the Malaysian market
in March.

"We cater for the young generation and we're excited about the potential of
the Saga which is a very economical car, something that represents a good
alternative for Iranians," he said.

Elaborating on the Gen.2, Syed Zainal Abidin said feedback showed that
people were attracted by its design besides the fact that the model represented
a different value proposition.

"Obviously we need to improve on the overall price positioning, and that's
why going from CBU (completely built-up) to CKD will give us a slight advantage
because the CBU import duty is slightly higher than for the CKD version," he
said.

The Proton managing director felt that the busines model for Iran would not
be the CBU as it would not be cost-competitive in the long term.

"It has to be the CKD with extensive localisation," he said.

Proton will also establish an office in Iran by March 2009, signalling the
car manufacturer's intention to go deeper into the Iranian market.

"The time has come for us to be more serious about Iran. The office will
allow us to have our people on the ground to provide support from the technical
point of view, the service and, of course, the marketing plan that will give us
a better understanding of the Iranian market," he said.

Syed Zainal Abidin said the move would also enable Proton to react faster in
a competitive market such as Iran.

According to him, Proton's presence in Iran would not be confined to the
domestic market as the country could also serve as a hub for the company's
expansion in the Middle East.

Besides the relationship with Zagross Khodro, Proton also entered into a
strategic collaboration agreement in August with another Iranian car company
called Saipa, basically a government-owned entity similar to Proton.

Syed Zainal Abidin explained that it was a technology collaboration with the
possibility for Saipa to use the Proton-developed Campro engine in its cars as
well as the joint development of a car using Proton's platform.

"It gives a very unique opportunity here for Proton to be a technology
provider. We're very excited about this opportunity. The agreement was signed in
August and hopefully by the first quarter of next year we'll come to a
conclusion that'll pave the way for the localisation of the Campro engine," he
said.

Proton expects the total demand for the Campro engine to hit about 100,000
units per year in the next three to four years.

"Our relationships with Zagross and Saipa should be complementary. We hope
to push for the localisation of the Campro engine where Zagross can use it for
the Proton cars and Saipa will also use the same engine for their cars," he
said.

-- BERNAMA