Malaysia's Proton Hits Heavy Traffic

When China's Geely Group Ltd. began marketing its compact cars in Malaysia in June, showrooms overflowed with people. They had come to check out the first China-made cars to go on sale in Southeast Asia. Until recently, kicking the tires of foreign cars was a novelty in Malaysia: High tariffs kept all but the ultra-rich from buying such vehicles. Now tariffs are falling, and Kuala Lumpur's roads are crowded with Hyundais and Toyotas.

While such choice pleases consumers, it's a source of anxiety at the two giant auto plants operated by Proton Holdings. Proton is the government-controlled company that has long had a hammerlock on the Malaysian car market. As late as 1999, 66% of the cars sold in the Southeast Asian nation were made by Proton, and this year it will still sell 36%.