Perodua still sells 2x as many cars as Proton, why hasn’t MCO affected Perodua?

With the on-going Covid-19 putting a damper on businesses, you would expect that a budget car brand like Perodua, whose range of lower priced A- and B-segment cars are bought mostly by lower income B40 group consumers, will be affected more than higher range brands.

Actually the opposite is true. While the government’s temporary suspension of sales tax have artistically boosted market demand, Perodua dealers are reporting a higher number of customers downgrading from Japanese brands to a Perodua.

People who would otherwise be shopping for a Toyota or a Honda are now considering a Perodua.

In September and October 2020, Perodua recorded its two best ever monthly sales in its 27-year history – with 25,035 cars and 26,852 cars respectively.

As of November 2020, Perodua’s cumulative sales stood at over 195,000 cars, which is just 26,984 units less than the same 11-month period last year, or about one month’s worth of the company’s monthly sales.  

Remember that the businesses ground to a halt for nearly 2 months during the first round of MCO period from 18-March to 12-May, but Perodua is now only 1 month behind last year’s sales performance.

Perodua cars have very little emotional appeal but it gets the job done with little drama. It’s not just a case of “you get what you pay for” but also a case of “what you see is what you get.”

There are no nasty surprises. Perodua cars work exactly as you expect it to, and the driving experience is as boring as its looks. But such fuss-free motoring is exactly what buyers shopping in such economic climate are looking for. Throw in the bonus of its low running cost and competitive set of features, you’ve got a winner.  

We have compiled the running cost of some Perodua cars for you and you can find it here for the ​​Axia, for the Bezza here, for the Myvi here.

*Proton's announcement for Oct 2020 includes export models, bumping total to 11,392

Its domestic rival Proton still trails far behind, selling only half as much as Perodua, despite having updated its entire range with fancy infotainments and packing powerful engines into the Proton X50 and Proton X70.

But let’s not forget that Proton is now selling more cars than it ever had in the last 10 years. This year alone, Proton had by August 2020, sold more cars than it did in the entire year of 2019.

Proton has improved a lot but the gap is still far too big. So what’s dragging Proton down?

*Proton's announcement for Oct 2020 includes export models, bumping total to 11,392

The problem is that the fresh new and fancy Geely-based models like the Proton X50 and Proton X70 contribute just around 35 percent of the company’s total sales.

It is worth noting that the Perodua Aruz still outsells both the Proton X50 and Proton X70. Surprising eh? Of course, this could change in December as Proton ramps up production of the X50.

The bulk of Proton’s sales still comes from regular point A to point B cars like the Proton Saga, Proton Persona, Proton Iriz, and Proton Exora – all of these models are not as competitive against Perodua’s equivalents and this is something Perodua knows very well.

The budget car segment is all about commuter cars and away from Facebook comments, actual buyers shopping in this segment don’t care about fancy infotainment features or performance attributes like ride and handling.

Instead, Perodua’s resources are devoted to fine tuning every aspect of the Perodua ownership experience and to make the ownership experience to be as boring as possible.

Sounds hard to believe, if you think about it, it’s only logical. Nobody is going to rave about their commuter cars and a quiet Perodua customer is a happy Perodua customer. Perodua owners are not going to post their Peroduas on Instagram but they will do so if they had a bad after-sales experience.

Proton’s upward push in adopting the latest technology is not wrong. In fact, it’s the right way forward and will deliver dividends in the longer term, especially in leaping ahead of Honda and Toyota, but financing this upward push are the more boring, regular Proton models.

Before Proton can introduce more sophisticated BMA/CMA-platform Geely-based models here, Proton needs to sell a lot more Persona, Iriz, Exora, Saga (collectively referred to in Proton as the PIES models).

It’s a bit like Porsche need to sell 6 times more Macan and Cayenne before it profitably develop and sell one 911.

Like many things in life, the glamorous aspects get all the attention but the one that’s actually making the most money is the part that’s often overlooked.