Geely buys into Malaysia’s Proton
Will ease entry into other SE Asian markets: experts
Chinese automaker Zhejiang Geely Holding Group Co said Wednesday that it will buy a 49.9 percent stake in Malaysia- based carmaker Proton from DRB- Hicom, and it will also take a 51 percent stake in Proton’s luxury car brand, UK- based Lotus Group.
The deal was announced in a statement posted on Geely’s website.
Beating out potential rivals such as PSA Group, Renault SA and Japan’s Suzuki Motor Corp, Geely will become Proton’s exclusive foreign strategic partner.
Negotiations are ongoing and a final agreement is likely to be signed by mid- July. Geely is committed to supporting the transformation of Proton and Lotus with the exper
tise and resources within the wider Geely Group, and both parties aim to build Proton into the most competitive brand in Malaysia and a leading brand in Southeast Asia, according to the statement.
Geely Vice President and Chief Financial Officer Li Donghui said that “with Proton and Lotus joining Geely, we’ll strengthen our global footprint and develop a beachhead in Southeast Asia.”
“Geely is full of confidence for the future of Proton. We will fully respect the brand’s history and culture to restore Proton to its former glory with the support of Geely’s innovative technology and management resources … we also aim to unleash the full potential of Lotus and take its development to the next level by expanding and accelerating the roll- out of new products and technologies,” Li noted.
“The takeover of Proton and Lotus will help Geely enhance its brand value and improve the automaker’s product structure, but it will be less helpful in terms
of technol- ogy,” Zhang Zhiyong, the founder of Wenfeng Automobile, told the Global Times on Wednesday.
“Geely has accumulated much management and operation experience in terms of having a multinational brand after it acquired Volvo [ in 2010] ... Buying Proton will give the Chinese car company a fast lane into the Malaysian market, where protectionism is quite strong against foreign companies and local customers have strong loyalty to local brands,” said Zeng Zhiling, an analyst at Shanghai- based consultancy LMC Automotives.
Proton, established in 1983 by former Malaysian premier Mahathir Mohamad, received 1.5 billion ringgit ($ 338.2 million) in government aid in 2016 on the condition that it pursue a turnaround plan and seek a foreign partner, according to a Reuters report
Wednesday.
“After Geely gains a firm foothold in Malaysia through the tie with Proton, the Chinese company can easily enter markets in the Association of Southeast Asian Nations.” Zeng Zhiling, an analyst at Shanghai- based consultancy LMC Automotives
Automotive News Europe. In recent years, Geely expanded swiftly around the world. The leading China- based private car group acquired Sweden- based Volvo Cars from Ford Motor Co in 2010 and acquired the London Taxi Co in 2013.
Geely performed well in 2016, with domestic sales up 50.2 percent year- on- year to 765,851 vehicles, according to Geely’s earnings report released in March. Revenue reached 53.7 billion yuan ($ 7.8 billion), up 78.3 percent.
Europe and the US have been targeted by Geely for future expansion, said Zhang of Wenfeng Automobile.
“These are mature markets, and if Geely can enter them successfully it will boost its global brand recognition,” he noted. There are fewer risks in the European and US markets where the regulatory environments provide security for all participants, including foreign ones.
But Zeng warned that it will take time for Geely to successfully expand into Europe and the US, which are both fiercely competitive and saturated.