Proton a gem in the eyes of for­eign carmakers

New Straits Times - - Business -

TWO huge car com­pa­nies with global op­er­a­tions are neck-and­neck in their bid for a ma­jor­ity stake in Proton, with both of­fer­ing many sweet­en­ers to win over the na­tional car­maker.

To th­ese bid­ders, Proton could be a very valu­able com­pany when placed in a global con­text, ac­cord­ing to an­a­lysts.

The two — Zhe­jiang Geely Holdings Group of China and PSA Group of France — are re­gard­ing Proton as a strate­gic fit to their plans for global dom­i­na­tion.

Proton is piv­otal in re­al­is­ing a strat­egy that will see the car­maker an­chor­ing the Asian leg of a multi-con­ti­nent au­to­mo­tive foot­print.

For starters, Proton re­mains as Asean’s only full-fledged car man­u­fac­turer that con­ducts its own re­search and de­vel­op­ment, de­sign, man­u­fac­tur­ing, dis­tri­bu­tion and sale of cars.

A Proton deal is strate­gic in sev­eral ways — first, it be­ing the only car man­u­fac­turer in Asean; sec­ond, its op­er­a­tions can be quickly bolted on to a big­ger global player such as Geely and PSA; and lastly, it is lo­cated right in the cen­tre of Asia, the world’s fastest grow­ing eco­nomic re­gion.

Proton’s as­sem­bly plants in Shah Alam and Tan­jung Malim have a com­bined ca­pac­ity of up to 400,000 cars per an­num.

Large for­eign car play­ers are aware that Proton sits on a ready­made car ecosys­tem and in­fra­struc­ture. It would be “plug and play” for any player that wants to ex­pand into Asean re­gion.

It has been ar­gued that Geely or PSA could eas­ily start a “green­field op­er­a­tion”.

But green­field car man­u­fac­tur­ing op­er­a­tions would run in ex­cess of US$2 bil­lion (RM8.87 bil­lion) and may take three to five years to com­plete.

This “green­field op­tion” was ac­tu­ally mooted by PSA as its first op­tion to es­tab­lish a man­u­fac­tur­ing foot­print in Asia, un­til Proton came along look­ing for a for­eign strate­gic part­ner. This was the turn­ing point with PSA de­cid­ing to fo­cus its at­ten­tion on Proton, a car man­u­fac­turer with 30 years of hands-on ex­pe­ri­ence and whose ven­dor ecosys­tem spans the A-to-Z of car man­u­fac­tur­ing.

PSA much prefers the Proton route, de­scrib­ing the move a clear way “to avoid beginners’ mis­takes” when en­ter­ing Asean.

Through Volvo, Geely has a strong global brand but no man­u­fac­tur­ing fa­cil­ity within Asean, mak­ing it strong in China but weak in fast-grow­ing Asean. Again, Proton can step in to fill this gap.

With a for­eign strate­gic part­ner, the pic­ture ahead for Proton will be al­most un­recog­nis­able.

Within three years, an­a­lysts ex­pect Proton to come out with a slew of new mod­els through tech­nol­ogy and plat­form shar­ing as well as a new line-up of sport util­ity ve­hi­cles.

An­a­lysts also ex­pect Proton to be a truly Asean brand with sales of around 300,000 units, or three times its cur­rent vol­ume, and within five years, sales will climb to 500,000 when it en­ters greater Asia. Ber­nama

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