KUALA LUMPUR: More than a hundred parts vendors affiliated with Proton Holdings Bhd are facing severe financial strain due to escalating operational expenses, according to Datuk Low Kok Chuan, president of the Malaysia Fujian Chamber of Commerce and Industry.
In a statement, he said that despite the Proton Vendors Association (PVA) reaching out to the national car maker to address the challenges they are encountering, their appeals have been disregarded.
Low emphasised that numerous suppliers and vendors are currently grappling with financial distress attributed to dwindling orders in recent times, leading to an unsustainable business environment.
Expressing concern over the potential ramifications, Low cautioned that if this situation persists, it could lead to the collapse of many vendors, affecting thousands of employees across the automotive industry chain.
He attributed the root cause to Proton's failure to fulfill the promised quantity of parts orders for its 50, X70, and X90 models, which has resulted in a significant reduction in production output by up to 50 per cent.
Consequently, many vendors are experiencing financial losses, forcing some to cease operations altogether.
Business Times has reached out to Proton for comment.
It is understood that the company is preparing to issue a statement on this matter.
Meanwhile, Low said the predicament has not only jeopardised vendors' production capabilities but also hindered their capital investment, expansion plans, and human resource strategies.
He asserted that, despite suffering substantial losses, Proton has shown no willingness to address the issue.
Additionally, he criticised Proton's decision to import competitively priced locally assembled (CKD) parts from China, citing the reluctance of Malaysian vendors to reduce prices as the rationale behind this move.
Such actions, according to Low, have further strained the relationship between Proton and the vendor association.
Highlighting the plight of small and medium enterprises (SMEs), Low emphasised that the surge in electricity bills and the government's announcement of a minimum wage hike to RM1,500 from July 1 last year have exacerbated suppliers' financial woes.
Echoing these sentiments, an anonymous vendor disclosed that despite Proton's initial agreement to deliver parts for 1,500 cars monthly, it has come down to only 200 to 300 cars a month.
This substantial shortfall in orders for parts has resulted in financial losses for the vendors, who are burdened with expenses related to production machinery, manpower, and other overheads.