Geely’s stake purchase helps lift Proton competitiveness
SEREMBAN: The sale of Proton Holdings Bhd’s ( Proton) stake to China- based Zhejiang Geely Holding Group Co., Ltd ( Geely) is the best way to ensure that the national carmaker stays competitive, Negeri Sembilan Menteri Besar Datuk Seri Mohamad Hasan said.
He said Proton needed a strong partner to enable it to continue to remain sustainable and viable.
“Speaking from my experience in the automotive world before, I viewed the tie-up between Proton and Geely was very long overdue,” he told reporters after chairing the State Executive Council meeting here today.
Before he was made Menteri Besar in 2004, Mohamad was the managing director of Cycle & Carriage, which sells Mercedes Benz, for 10 years.
Mohamad said as a rule of thumb, a car company which failed to produce and sell more than one million units per year was no longer viable.
“So, that’s why over the past 10 years or 15 years many global automotive companies joined forces and some were forced to sell theirs to another company.
“Many companies had done so, but Proton can last for so long, although in terms viability, I think it’s not viable as they are already selling less than 100,000 units a year,” he said.
The government continued support and subsidies has enabled Proton to survive in the industry although its is privately owned, he said, adding that, “But how long does the government has to do so? Relying on the government’s money to keep Proton afloat is not smart enough.”
Mohamad said the tie-up would enable Proton to introduce many new models as it had not been producing new models.
“When there is no new models, its retail support is not strong. Dealers cannot invest when no new models are released while existing models are already very tired looking. And to produce a new model, its platform or chassis, required a capital expenditure of approximately RM500 million. Hence, companies like Proton are not able to produce new models due to its large expenditure.
“With the tie-up, Proton no longer need to produce their own platform and can share the same platform with Geely.
“For example, Proton can produce Proton SUVs by using Geely’s platform. Proton will also be able to market their products to China or other countries,” he said.
Mohamad told the people not to become emotional over the tie-up and claimed that Proton is now owned by China.
“This is a business decision, and we don’t want Proton to close shop as the automotive industry has a huge support industry. About 60,000 people are directly and indirectly involved with Proton,” he said. — Bernama