Friday, October 8, 2010

Hwang DBS Vickers Research expects knee-jerk reaction to Proton recall

KUALA LUMPUR: Hwang DBS Vickers Research expects a knee jerk reaction to PROTON HOLDINGS BHD []'s voluntary recall of its Gen2 and Satria Neo cars made between 2004 and 2008 because of a clock spring malfunction.

It said on Friday, Oct 8 that this item connects switches and airbag to the radio, horn and cruise control. The problem raises potential safety concerns e.g. in extreme cases, the deployment of the driver side airbag. Proton would bear all costs of labour and parts.

'We expect a knee jerk reaction to this news. This should drive Proton to be more diligent in sourcing its parts and improve the quality of the vehicle it produces.

'Given that 16,000 vehicles are affected (over 2004-08) versus 160,000 units sold annually, we expect the financial impact on FY3/11F to be minimal at this point. Consequently, it has negligible impact on our RM6.60 TP for Proton, which is based on 0.7x CY11F NTA. We reiterate our Buy call on Proton,' it said.


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