PRODUCT DEVELOPMENT Calendar Year 2006, the Savvy Light Went on Sale in July of Financial Year 2007-2008
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60 PROTON 2007 ANNUAL REPORT operations review set of younger customers. Though development began late in the PRODUCT DEVELOPMENT calendar year 2006, the Savvy Light went on sale in July of financial year 2007-2008. Developing new models and variants of high quality while meeting the market's needs are amongst PROTON's top priorities. The year under review also saw tangible efforts to enhance linkages within our product development and motorsports In early 2007, PROTON introduced a brand new facelift for its divisions. In the third quarter of 2006, PROTON unveiled a limited highly popular WAJA sedan. The facelift focuses on a simpler, more edition of WAJA & GEN.2 variants that were designed and contemporary design at the front that gives the car a bolder developed by our motorsports division, R3. These enhanced appearance and improves engine cooling. There were also interior models have improved handling and performance, and are tuned and exterior colour changes as well as quality upgrades based on for the enthusiast. customer feedback. Built to commemorate PROTON R3's overall victory in the Merdeka Millennium Endurance Race 2005 & 2006, only 200 units of each model were planned. These unique variants feature one-of-its-kind bodykit styling and performance upgrades. In the near future, PROTON plans to introduce a limited edition series of the Satria NEO and Savvy to commemorate the 50th anniversary of Malaysia's nationhood. These Merdeka editions will commemorate the founding of the nation and will be produced in a limited series of 200 cars each. Both the Neo and Savvy will be finished in unique colours and feature styling accents derived from The Waja's facelift was closely followed with the unveiling of a traditional Malaysian Batik themes. cosmetic freshening of our award-winning Savvy and the addition of a premium model with standard ABS and airbags. Key features As testament to the dynamism of our Product Development team, include a new honeycomb radiator grille, a more modern, simplified the PROTON Savvy has recorded various awards and design for the rear liftgate and new exterior colours. This upscale achievements during the year under review. A notable accolade Savvy was developed alongside a Savvy Lite model that is was the setting of a new record by our 1.2 litre Savvy for the Most equipped and positioned at a lower price point to bring in a new Fuel-Efficient Drive around Peninsular Malaysia as verified by the PROTON 2007 ANNUAL REPORT 61 operations review Malaysia Book of Records. The Savvy also walked away with the New Straits Times/AmBank Group Cars, Bikes & Trucks 2006 Car of the Year Award for the Supermini category, as an additional testament to its abilities and virtues. Kudos were not limited to our products, either. One of PROTON's CAE (Computer Aided Engineering) Engineers, Noor Hisham Ismail, contributed a study on Optimisation Technology that was named Best Paper at the Altair CAE User Conference in Bangalore, India, in August 2006. An even greater adventure lies ahead, with the financial year 2006-2007 seeing the formative stages of development of two new products that are key to a major renewal of PROTON's complete portfolio of products. These models, to be introduced in the second half of the financial year 2007-2008, will provide Savvy’s entry into the Malaysia Book of Records for achieving ‘The Most Fuel-Efficient the first step in the redefinition of PROTON as a manufacturer of Drive Around Peninsular Malaysia’. high value, high quality affordable cars. 62 PROTON 2007 ANNUAL REPORT operations review RESEARCH & DEVELOPMENT PROTON's subsidiary, Lotus Engineering, has developed a first proof-of-concept petrol/electric hybrid car that was displayed at the 2007 Geneva motor show in Switzerland. This vehicle uses its R&D remains an integral platform for PROTON to improve its combination of petrol engine and electrical drive to offer greatly capabilities of developing products and offering services that meet reduced exhaust emissions and improved fuel economy that are domestic and global market requirements. well ahead of clean-air legislation in the region. Both the hybrid vehicle project and the NGV programme are indicators as to how Experience is a crucial factor for our R&D team, more so in an PROTON is investigating and implementing ways to use operating environment where a short learning curve is imperative. technology to overcome automotive-related environmental and As such, during the year under review, our state-of-the-art R&D social issues facing the world today. facilities were put to productive use both internally to support PROTON's initiatives as well as for external clients. In addition to bolstering the skill-set of our R&D team, various tests of components and systems conducted for external clients have One of the core areas managed by our R&D team is in the area proven to be a revenue generator for the Group. PROTON has of automotive testing. Spearheaded by PROTON's provided testing and validation services and facilities to a number Homologation, Testing & Prototype (HTP) Department, the year of component manufacturers in the ASEAN region. under review saw a multitude of tests being conducted using our facilities including testing of components, materials, safety and strength (CMSS), exhaust emissions and fuel consumption and complete vehicle testing. Studies into applied research are currently focusing on the application of natural gas as a clean and affordable fuel to supplement petrol. The Government of Malaysia is promoting natural gas as a supplement to petrol, and PROTON is taking a lead position in the development of a NGV (Natural Gas Vehicle) aimed at private buyers as well as one aimed at fleet usage, currently the primary users of natural gas as a motor fuel. The NGV models will cover a range of PROTON models, the first of which will be introduced in calendar year 2008. Lotus EVE Hybrid made its debut at the Geneva Motor Show PROTON 2007 ANNUAL REPORT 63 operations review TECHNICAL ENHANCEMENT PROTON is cognisant that our human capital is the engine of growth that powers the advancement and evolution of our engineering capabilities. As such, consistent and relevant training is crucial to ensure that our employees have the knowledge and tools to help drive PROTON forward. During the year under review, the Group participated in the MAJAICO Programme, which is a government to government programme between Malaysia and Japan focusing on industrial development. A total of 14 PROTON engineers were sent to Japan to learn and understand Japanese manufacturing theory and processes while enhancing cross-cultural communications. Participants of the MAJAICO Programme In the last calendar year, a number of PROTON senior engineers were seconded to Lotus, assisting the company's development of a new model that will serve as a keystone product for the renowned British manufacturer of sports cars. PROTON engineers are not merely supporting Lotus, but are in lead positions in the development team in the areas of product development and production process for the new car. In addition, the Lotus Suspension Dynamics Simulation and NVH (Noise, Vibration and Harshness) analysis knowledge transfer to PROTON have provided us with the industrial know-how to improve and manage our Ride & Handling Programme and NVH feature during the concept and planning stage of product development. 64 PROTON 2007 ANNUAL REPORT operations review Manufacturing The manufacturing capacity and cabability comprises two main plants in Malaysia as well as two plants overseas. These are PROTON Shah Alam in Selangor, PROTON Tanjung Malim in Perak, Chikarang in Indonesia and Norwich in the United Kingdom. PROTON 2007 ANNUAL REPORT 65 operations review The total combined installed capacity for vehicle manufacturing is including painting and complete vehicle testing facilities which have 400,000 units per year. As of today, over 2.8 million units of cars enabled PROTON to evolve from being a mere assembler to an and 2.6 million units of engines have been produced in these entity with full-fledged manufacturing capabilities. Malaysian plants. Production volume was 104,485 units (comprising main plant With a reputation of being one of the most integrated 42,628 units, MVF 19,310 units, Tanjong Malim 41,107 units and manufacturing facilities in the region, the Malaysian facilities CKD 1,440 units). There was a negative variance of 98,515 units comprise casting and foundry, machining, stamping, assembling from AMP production volume plan of 203,000 units. Delivery 66 PROTON 2007 ANNUAL REPORT operations review volume is 99,956 units (comprising domestic 79,008 units and export 20,588 units) and average channel inventory stock is 2.3 months. All models have an average of more than two months holding stock except for Satria Neo, Perdana and Iswara. In order to support the best production and delivery volume, among the key initiatives that were implemented included the Saga Sub-27K Program from March 2007; introduction of PROTON Production System and Total Productive Maintenance; build-up quality improvement through on-line quality activities and models, the medium volume factory produces the Waja and optimisation of productivity level and operation ratio that were Chancellor models for domestic as well as for export markets. impacted by the lower than planned volume. Within the financial year, operations were severely impacted by the Among the mitigation initiatives taken to immediately respond to the changes in the market resulting in lower than planned volume as changes due to volume reduction included reduction of production well as high channel inventory. Due to volume reduction, mitigation volume to meet required orders from June 2006, revising working initiatives were taken to immediately respond to the changes and conditions from two shifts to one shift operations from June 2006, focus was mainly on improving the quality of products, operational line-shutdown in November and December 2006, manpower efficiency, and new product variants and introductions.