How to save Proton

So, our Prime Minister is intervening personally in order to to save Proton, but he still can't get a meeting with the Volkswagen chairman.

Well, I've got your saving Proton right here. (Warning: this is not going to be pretty.)

Easy-peasy steps (not).

1. You got the wrong partner. Choose Ford, which owns, among other brands, Volvo.

2. Co-operate on building the Tandem, the most revolutionary new car design of the past 20 years that nobody has heard of. Tell them you'll build it for them at Tanjung Malim and buy the 1st 100,000 off the line. Just as long as Volvo shows Proton how to build it. And the vendors too.

3. Tell them you'll make it work in Malaysia because you're a National Car Company and through a combination of taxes, duties, tolls and other incentives, you can make basically everyone in Malaysia buy this car in order to get it rolling and reaching production capacities sooner. If they don't believe you, fly them in to KL and have them sit at the PLUS highway toll stand at Sg. Besi counting the Sagas and Wiras that pass by. Then tell them all these model designs are 12-25 years old.

4. Export-wise, Ford and Volvo have to take over. Proton has a basically crappy reputation in Britain, but I hear they do better in the Middle East.

The facts.

Let's just state the obvious.

1. Proton is a national car company. State-owned. Let me repeat and highlight, STATE-OWNED.

2. It is declining in market share through a combination of poor quality products, safety issues and lack of models. After 20 years of operating, it still only produces sedans, completely misreading (or perhaps not even bothering to read) the market's reception of MPVs, SUVs and crossovers. (It also over-estimated the market's reception of freakmobiles.)

3. It has a knowledge gap in manufacturing to safety standards now prevalent in the world, and is in dire need of knowledge and technology transfer.

4. It has an alleged high cost base in the inefficiencies of its vendor network.

5. It owns Lotus, a sports car marque known for the exceptional handling of its models.

And so, to these facts: No. 2 and 3 and 4 are serious problems. No. 5 is an asset, but one that's not really paying off at the moment. No. 1, well, I don't see it as a problem. Plenty of state-owned corporations do well, given the proper management and incentives. (Petronas being a very clear example.)

The challenge therefore is to find a partner what can overcome points 2, 3 and 4, maximise point 5 and turn point 1 into an asset, an opportunity. To which we arrive.

You know what a state-owned company automatically has? Three important things:

Patience.

Access to a market.

And lastly, if the formula is right: Balls.

Now, to see why this plan would address the above points, one by one:

Turning "state-owned" from problem to benefit.

1. I've written elsewhere on why I'm a fan of the Tandem. However, I recognise that as a product that needs to be marketed by a business, it's got a very slim chance. The benefits of using the Tandem are only felt the more people use it - a positive externality problem you economists out there would be familiar with. And in this case, its not like the 1st fax machine where at the least, you and your branch office could communicate even if no one else had it. In this case, a seriously large amount of people need to use it before congestion starts to ease.

This means government intervention. Governments try to regulate externalities where possible and feasible - smoking zones to get the smokers away from the non-smokers, carbon taxes on your factory emissions. These are regulations for negative externalities, but incentives to promote positive externalities also exist - for instance, California provides tax rebates to you if you install solar panels on the roof of your home, in order to alleviate the burden on its over-stretched electricity grid. In a nice allegory, the Tandem would alleviate the burden of an over-stretched tranportation grid.

For the Tandem, a whole slew of incentives would need to be provided:

- Financial: reduced road taxes, tolls, excise duties and COEs (for those in Singapore) for Tandem ownership.

- Logistical: Dedicated Tandem/motorcyle lanes only.

So, basically with the Tandem, you've turned what normally is a liability - a state-owned enterprise, uncompetitive and bloated - into (potentially) an asset - a state-owned enterprise, with patient and far-sighted shareholders who can realise benefits more than individual private enterprises. This stands to reason: governments would save the most in construction and land acquisition costs for road construction, and they should justly foot the bill for widespread adoption of the Tandem.

Synergy

2 and 5. The two issues which will be of primary importance for a vehicle of this sort will be safety and handling. Safety, because you're dealing with a much more compact automotive frame while still needing to meet safety standards. Handling, because you're dealing with a narrow profile prone to cornering problems. Volvo and Lotus are marques which have world-renowned reputations for them respectively. Lotus, Proton already has. It would only need the expertise of Volvo to finish the job.

And let's be honest - the Tandem looks at this stage like a lab project (I could be wrong, but no news has come out since the first invitation to the press to view it.) Too much government lobbying needs to accompany its adoption, as discussed above. It's something which Volvo has in their portfolio, but all it could do in the end is provide influence to their ongoing 3CC concept car, and that's it. But if someone can come along and say to them, we'll take your on-the-shelf lab project and run with it, in exchange for you providing us some technology and knowledge transfer, I think they'll go for it. Not much to lose on their part. That's synergy to me, in terms of design capability and corporate win-win.

Leapfrogging

3 and 4. One of the primary reasons for partnering with a larger, foreign auto-maker is the access to technology and manufacturing know-how that they provide. That much is obvious. On these 2 points, I can't comment that Ford is a better partner that GM or Volkswagen, but I will say this: you need something to trade with, something that will make it worth their while to talk to you. And the Tandem, overlooked and under-estimated, is precisely that bargaining chip, a chip which also happens to serve Proton's national aspirations.

There's a unwritten rule in setting targets, for sales, for learning, or for anything - aim for something beyond what you actually want to achieve. Meaning to say, in order to catch up, you need to leapfrog. You can't just try to catch up, otherwise you'll never do so - you'll always be introducing a new feature 2 years after someone else has already done the same.

The Tandem represents an automotive challenge which if surmounted would elevate its manufacturer a step beyond its contemporaries, something others would have to catch up to. Such opportunities come rarely in business. Attempting to solve the real-world problems of implementing the Tandem - in a package that is safe, easy, and economical to own - would accelerate capabilities in automobile manufacturing far beyond than simple catching up, because the company would be solving problems no one is attempting to do so at the present time.

Betting the farm

You'll find examples of this sort of leap forward in history - the steamship. The 1st automobile. The 1st jet airline. The Boeing 747. The Tandem is a much more prosaic example, but its still different enough from current cars to warrant comparisons to those great icons of manufacturing. Such iconic products represent a great throw of the dice by the companies involved, an almost all-or-nothing, bet-the-farm strategy which vaulted them beyond what others were at the time.

Such boldness was what Dr. M had in mind, I think, when he started this project. If you ask me, there were lots of bumps along the way, and a lot of Malaysians have paid for Proton's foibles for the past 20 years. However, if we still want to do it, I think this is the plan that the vision would need to be attached to, and the only decent way that Proton can go beyond its current dead-end trajectory.

Told you it wouldn't be pretty.

Personal Rapid Transit

In a recent Technology Quarterly from "The Economist", a report was made on Personal Rapid Transit (PRT) systems. Unlike Mass Rapid Transit systems, these would be small, 1-4 person transport pods, travelling on fixed rails, but with lower running costs, more accessible stations and overall faster transit times.

Cute. But if you're talking about overhauling transportation, reducing wait times and congestion, I prefer another solution.



This is the Volvo Tandem, a concept car being developed by the Volvo Monitoring and Concept Centre (VMCC), Volvo's design studio in Southern California. This is the 1-seater version; here's a 2-seater:

The basic idea behind this car? The driver sits in a narrow, bobsled-like vehicle while the passenger (in the 2-seater version) sits in-line behind the driver (just like a bobsled). That's essentially it.

Small Idea, Big Impact

I had an epiphany once, while sitting in one of KL's interminable gridlocks. I was looking around at the cars around me on the 3-lane highway I was on. Most had only single occupants, like me. Everyone was bored and frustrated. Some were picking their noses.

In terms of square feet of road and lane space, the average 3-car-abreast space on the road held a grand total of.... 3 people. I looked at the empty seat next to me. I thought, wouldn't it be great if we had smaller cars, that could fit just one person, so you could squeeze 6 cars in 3 lanes instead? Just chop my Proton Waja in half and presto, you're done.

As if to complete the epiphany, a fleet of motorcycles then chose this time to whiz past, in the small crevice between my car and the car next to me.

(One week later, I saw the Volvo Tandem cars you see above in a weekly paper. Oh well.)

Just imagine: the amount of road space already built in your city would double. Instantly. No need to build any thing at all. Just imagine the city you're living in, effectively doubles the size of its roads overnight, with no loss of living space. Would that traffic jam you're sitting in still be there? I'd bet not.

Just as long as some teensy-weensy problems are overcome.

Costs and Benefits.

The idea is sound, if we can get past the following problems:

1. Safety. For instance, distance between the head of the driver/passenger and either side of the vehicle (Volvo says the Tandem provides more clearance than even some vehicles today). Also, side impact and collision protection. These would all need to be enhanced in a slimmer vehicle like this.

2. Real-world problems. Can we truly achieve a vehicle with half the width of conventional cars? Can it steer? Do we need to re-sit driving lessons? How does the possible need to change 6 lanes before turning off alter driving behaviour? (quick answer: none at all. Go visit L.A., check out the 101 or 405 freeways near Downtown or Hollywood)

3. Secondary vehicle. Even Volvo doesn't say that this will replace all cars. Just that we will use such vehicles for commuting, and perhaps keep another, larger one, for holidays, camping, bringing the family out to eat etc. That means you, Mr. and Ms. Consumer, will still need that SUV, and hence you may not want to expend the cash buying what essentially is a commuting vehicle.

4. Cost. So, could a car like the above be built economically for the masses, at the same cost levels as today's Kenaris, Kancils and Kelisas? I think so.

5. Lanes, ramps and turn-offs. That's a serious amount of additional road painting that would need to be done, y'all.

However, getting past those little niggling problems above could yield huge, huge benefits:

1. Savings in public transport infrastructure. Bus lanes. MRT. Car pool lanes. LRT. PRT. All these things cost money and eat into public funds. Even in vaunted Singapore, which has most of the above, congestion is creeping up. Then think about other urban metropoles that don't have Singapore's public infrastructure. KL, Bangkok, Jakarta and Manila? This is a way to increase the capacity of existing infrastructure without governments needing to spend a dime. We're talking savings of billions and billions of dollars.

2. Middle-class aspirations. It doesn't matter how much infrastructure is built. At the end of the day, governments in this region are committed to the growth and creation of a large middle-class, and one of the pillars of middle-classhood is car ownership, especially in sprawling cities where public transport is hampered by distance and suburban fragmentation. That means governments are fighting a losing battle on this if they want to encourage public transporation past a certain point.

3. More market friendly. Adopting this vehicle would be less dramatic than governments think. All existing market-oriented transport policies - congestion pricing, road tax, parking fees, tolls, COEs - can be easily amended to adapt to this new vehicle. In fact, they could be adapted precisely to encourage using this vehicle. Wanna pay half your season parking fee every month? Wanna pay half your road tax every year? Wannna pay half the COE you would normally pay for a new car? Half the toll? OK, OK, I exaggerate, maybe it won't be half, but it will definitely be less.

4. Green. Smaller cars, smaller mass, smaller loads... less carbon emissions, less oil, less everything. Its good for the planet.

One last thing to note: Volvo says that in their study, 90% of all commuting vehicles in today's roads are have only 1 person, the driver. 77% of ALL car trips (whether commuting or not) only have 1 or 2 people.

So, to recap, that's why I prefer this car over some PRT system bubble-pod which will cost more money, won't be as convenient, and still won't help me lugging my groceries home.

For more on the Volvo Tandem concept car: Motortrend review, Car Design Online