Corporate: Proton's Savvy strategy
By Siow Chen Ming (The Edge Daily)
National carmakers Proton and Perodua have long been competing in different segments of the car market, with the former dominating the sedan market while the latter concentrated on the small cars area.
However, the recent launches of new models such as the Perodua MyVi and Proton Savvy have for the first time brought both the national carmakers into each other's turf.
With over 21,000 units booked in just three weeks after its official launch, the MyVi has made a strong statement on the lower range sedan segment, which has long been the domain of Proton Iswara and Wira (these two models accounted for 60% of Proton's total unit sales last year).
"The over 21,000 bookings for the MyVi would certainly suggest that Proton is losing out some market share somewhere," says a motoring analyst.
The launch of the MyVi, says Perodua, is supposed to capture the market that it concedes to Proton when Perodua owners upgrade to bigger vehicles.
Perodua is heavily promoting MyVi's cabin space which is said to be "larger than the Iswara and as big as the Wira", and has priced the MyVi at RM41,200 (on the road with insurance) for the 1-litre model and between RM44,755 and RM51,300 for the 1.3-litre model.
Analysts say the fact that more than 70% of the MyVi bookings are for the 1.3-litre model has created a bigger concern for Proton rather than worries over whether sales of existing Perodua models would be cannibalised.
Proton struck back last week with the 1.2-litre Savvy, which is priced between RM40,523 and RM43,714 (on the road with insurance) for the manual version. The automatic model will come in a few months.
Proton's management says it is not pitting the Savvy head-on against the MyVi. Rather, Proton's new model is being positioned at the segment between Perodua's older and smaller models such as the Kelisa and Kenari, and the new and bigger MyVi.
The Kelisa and Kenari, with a price range of RM37,000 to RM44,000, currently dominate sales in the small-car segment and account for half of Perodua's total unit sales.
It would seem that Proton also wants to make sure that Perodua has something to worry about. But how successful would the former's strategy be?
The price difference between the Savvy 1.2 manual (standard specifications) and MyVi 1.3 manual (with similar specifications such as sports rims and non-metallic paints) is only around RM2,300. It is also worth noting that although the Savvy 1.2 manual basic model is priced at only RM40,523, which is the same or cheaper than the price of a Kenari, this variant is not equipped with an alarm and sport rims.
Proton CEO Tengku Tan Sri Mahaleel Tengku Ariff stresses that the Savvy is not competing with the MyVi. "Technically, the Savvy has a shorter wheel base [smaller size] than the MyVi, they are not in the same vehicles segment," says Tengku Mahaleel in a media preview of the Savvy last week.
This is, however, contrary to the recent teaser advertisements by Proton that advised buyers to wait for the launch of the Savvy and hold back their decision to commit to "another car", which is commonly understood to be referring to the MyVi.
The presentation materials given by Proton officials during a media preview also did not draw comparisons between the Savvy and the MyVi, but to other models such as Kenari, Kelisa and Inokom Atos.
Perodua dealers say Proton has cleverly mapped out its strategy with the Savvy. Before the 1.2-litre Savvy was launched, speculation was that Proton's new model would be priced at between RM43,000 and RM45,000 for the manual version — as has been indicated on Proton Edar's website. The prices were deemed too near to the MyVi 1.3-litre's price range and made the Savvy less competitive because it is smaller than the MyVi.
Commenting on this, Rosle Yaakub, head of the Proton Savvy programme, says it is normal to project a higher selling price rather than a lower one. "Instead of suggesting a lower price and then increasing it, we would rather do it the other way round," he adds.
Market observers say Proton has made the right move not to position the Savvy directly against the Perodua MyVi, which has quickly attracted a strong following.
As for the reception to the Savvy, Tengku Mahaleel and Proton officials did not respond to questions about the booking numbers for this model, other than saying that there are currently 800 units of the Savvy in stock to meet initial demand.
Analysts say the Savvy could stem the loss of Proton's market share while Perodua is gearing up to compete in Proton's traditionally strong segment in the lower range sedan market.
Though the launch of the Savvy was delayed from the fourth quarter of last year, Proton seems more prepared.
At the media test-drive and the launch of the Savvy, the cars on display seemed to be in much better condition than when Proton launched the GEN.2. When taken to Proton's racetrack, the Savvy impressed journalists with its handling and power from the Renault engine.
"We hope you can see the improvements in the Savvy. When you were not happy about the plastic interior in the GEN.2 and you complained about the power windows in our cars, we took the criticisms positively and we improved on this model. We hope that you would also be fair if you think that we have done a better job with the Savvy," says Tengku Mahaleel.
This time around, the Proton management seems to be setting a more humble target for sales, after GEN.2 sales could not match projections.
Tengku Mahaleel says the scheduled production of the Savvy is around 2,000 units a month and with this capacity, Proton can at best capture 20% of the 150,000-unit-a-year small-car segment. He didn't respond to questions about sales targets.