Geely takes stake in Proton, Lotus
KUALA LUMPUR: Chinese auto giant Geely on Wednesday announced it was taking a 49.9 percent stake in Malaysia’s troubled Proton as well as a 51 percent share in British sports car brand Lotus.
Proton’s parent DRB-HICOM said the deal would enable Southeast Asia’s first auto brand to tap Geely’s technology and access existing markets of the Chinese manufacturer.
The financial terms were not disclosed.
Malaysia’s Second Finance Minister Datuk seri Haji Johari Abdul Ghani said in a speech at an event announcing the deal that DRBHICOM initially invited 15 global auto players to bid to become a foreign strategic partner.
Eight were shortlisted, after which the list was whittled down to five and further down to three in the final phase, he said without naming the companies.
In February French carmaker PSA Peugeot Citroen expressed interest in taking a stake in Proton after the Malaysian firm announced it was seeking an overseas partner.
“Our intention was always to ensure the revitalisation of the Proton nameplate,” said DRBHICOM group managing director Syed Faisal Albar.
“It was Malaysia’s first national car brand and has more than 30 years of history. This deal will be the catalyst to elevate a brand that Malaysians resonate with.”
Geely Holding also owns Volvo Car Corporation and The London Taxi Company.
In a statement, Geely Holding said it would acquire a majority share of 51 percent of Lotus from Proton. Both parties expect to sign the “definitive agreement” for the deals before the end of July.
“This agreement lays the foundation for a wider framework for both Geely Holding and Proton and Lotus to explore joint synergies in areas such as R&D (research and development), manufacturing and market presence,” Geely said in a statement.
Proton was formed in 1983 by then-premier Tun Mahathir Mohamad as part of an ambitious national industrialisation plan, but has suffered from a reputation for unimaginative models and shoddy quality.
With government support, Proton initially dominated the domestic market but subsequently struggled with making profits, and hopes of marketing the vehicle as the “ASEAN car” fizzled out.
Meanwhile, news that China’s Geely Automobile Holdings Ltd has emerged as the foreign strategic partner for Proton augurs well for Malaysia as the partnership will place the national carmaker on a firm footing towards future growth.
This is in view that Geely has a proven track record of rescuing renowned Swedish automaker Volvo, which it bought in 2010, and sales of the Swedish brand exceeded the half a million mark within five years.
Geely can do the same for Proton, especially in maximising the capacity of its manufacturing plant in Tanjung Malim, as well pushing Proton brands onto the regional and global markets in a big way, analysts said.
Dr Azmi Hassan, a Geostrategist, expressed confidence that Proton would henceforth be on the upward growth trajectory, given Geely’s achievement in turning around Volvo and targeting sales to the tune of a million units for 2017.
Geely, which owns 100 per cent equity in Volvo, also whollyowns the iconic London taxi Company.
“What Geely did with Volvo’s turnaround, it will do likewise with Proton (and) the ProtonGeely partnership will not only be a “win-win” situation for both parties but also for Malaysia,” he told Bernama when asked to respond to news that Geely would be the FSP for Proton.
“Why would Geely acquire Proton, the only full-fledged car manufacturer in Asean if not to grow it in a region which it has got no footprint,” he said.
Proton’s parent company DRBHicom’s perseverance to look for a FSP to revive the national car maker to ensure its future growth is well-placed.
On Tuesday, DRB-Hicom requested a suspension of its shares on Bursa Malaysia. It closed at RM1.68, pending a material announcement.
He said Proton should no longer focus on the domestic market, but make footprints in Southeast Asia and globally through Geely’s capital, as well as their proven auto expertise.
Auto Analyst Hezeri Samsuri said that besides Geely having their own successful track record, they managed to boost Volvo’s performance to be even better than when Ford owned Volvo before.
Proton’s deal with Geely translates to growth in manufacturing, new car models, transfer of technology and platforms, increased employment opportunities, and bigger orders for Malaysian vendors, he said.
He said Proton should also strive to sell the national car to the vast China’s market, given the partnership between Proton and Geely.
Another analyst requesting anonymity said a major plus point Proton derives from the partnership is that Geely is an “entrepreneur-driven” auto company and one of the few left in the world as opposed to car firms owned by state enterprises and multinationals.
Geely’s founder Li Shufu, sometimes referred to as the “Henry Ford of China,” is a self-made entrepreneur who started building cars in 1998.
Geely chalked up car sales of 1.3 million units in February last year.