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Proton dealers face axe in network reshuffle

Proton UK has dismissed press reports claiming dealers will be selling Lotus cars alongside its own models within two years, but admits it is looking to weed out the worst performing retailers.

Media reports suggested the company was planning to dual franchise, but a spokesman says there are “currently no plans” to encourage Proton or Lotus dealers to retail both marques. “We will also not be using Lotus as an incentive to attract new dealers to the Proton network,” he adds. “Any dealer we appoint that is interested in Lotus will be considered on separate merits.”

Analysts also believe a dual-franchise move would be a mistake. “People would not go to a Proton dealership to buy a Lotus - both marques would be ridiculed,” says one source. Proton is looking to replace some of the 110-strong network, promising new dealers improved sales volumes on the back of forthcoming models. Sales slumped 20 per cent in the first six months of the year to 1597 units, compared to 2021 last year, raising questions over the profitability of retailers that have each sold less than 15 new cars.

Even assuming a generous eight per cent profit margin, dealers would be making around £800 per vehicle, with a return of just £12,000 so far this year. This places massive pressure on the used car operation - where Proton three-year residuals are typically below 30 per cent - and on aftersales business.

Proton has three new models in the development stages - the first, a replacement for the Wira is due by the end of next year. But the com-insists it has not been forced to tread water until these models, which rely heavily on Lotus engineering, are launched.

“We are intent on holding on to as much of our market share as possible while retaining our better dealers,” says the spokesman. “We are looking to recruit new dealers than can give us a boost now and handle greater potential in the future.”

Overheads will be reduced as Proton moves its head office from Bristol to the Lotus headquarters in Norfolk over the next nine months, though the PDI facility will remain. The Bristol office was under-utilised by nearly 40 per cent, caused by Proton's sales slump from a peak in the early Nineties.

“Proton has to pull in its expenditure - its market share is down in a market that is growing,” says Prof Garel Rhys, head of automotive research at Cardiff Business School. He also warns the carmaker not to overplay its relationship with Lotus. “Subliminal marketing highlighting Lotus engineering wouldn't be harmful, but it would be counter-productive to both marques to start slapping Lotus badges on Protons,” says Rhys.

Proton has appointed a new managing director, former general manager Brian Collier, to oversee the relocation. He replaces Colin Low who has taken up a senior management position at Proton's Malaysian plant.

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