Proton new deal
Published on Jan 3rd, 2008 in Malaysia with
When Proton announced a deal with JinHua Yongman for a 30K units Gen 2 few months back, I am quite doubtful the deal will benefit Proton’s financial situation.
TheStar today reported Proton is ready to deliver 2nd batch of Gen 2 (348 units) to China and expected another 1600 units by end of next month. This could be good news to the shareholders and the die hard Proton supporter. At least something is happening. As a proton shareholder, I also hope that more Proton will be on the road of mainland china.
There are market observer said that Proton is not benefit from the deal. I don’t believe Proton is not making money since Proton is selling the car almost at the cost price. Actually I ma not so particular about the profitability proton should earn from the deal. Bottom line, proton should not loose.
Even though Proton is not making money from the deal, the increase of capital utilization and movement of inventory will help lower down the operation cost and loosen the cash flow which tight up in the high inventory since long time ago.
Anyway, my biggest concern on this deal is the payment term and condition agreed. I really hope that we don’t end up giving away the car to the Youngman who suppose to pay for the 30,000 units Gen 2.
Please don’t repeat the stupid mistake that our dear goament did for the North South highway contract.