DRB-Hicom soars on govt decision not to buy Proton
Move paves way for Geely to go ahead with turnaround plan
PETALING JAYA: Shares in DRB-Hicom Bhd surged after the Pakatan Harapan government decided it would not buy Proton Holdings Bhd, paving the way for Chinese strategic partner Zhejiang Geely Holding Group Co Ltd to proceed with the turnaround of the national car company without political intervention.
Shares in DRB-Hicom closed up 28 sen, or 16%, at RM2.03.
One industry observer said “it was a good thing” for the Government to “leave Proton be.”
“Of course it is a good thing because Geely should be given a chance to turn around Proton without political interference.
“At the end of the day, it is about making cars that people want to buy; not about politicians telling car companies how to build them,” he said.
At a press conference after chairing a Cabinet meeting yesterday, Prime Minister Tun Dr Mahathir Mohamad said the new government would not buy back Proton, as it now belonged to tycoon Tan Sri Syed Mokhtar Al-Bukhary.
Syed Mokhtar holds an indirect 55.92% stake in Proton’s parent company DRB-Hicom via his private vehicle, Etika Strategi Sdn Bhd.
Set up in 1983, Proton was Malaysia’s first national car and Dr Mahathir’s brainchild during his 22-year premiership.
However, poor brand perception eventually resulted in lagging sales over the years and this ultimately led to Geely acquiring a 49.9% stake in Proton in September last year.
The takeover by Geely, which owns Volvo, was a welcomed move and considered “long overdue,” said an analyst.
“The emergence of Geely as Proton’s foreign strategic partner was a milestone for the national carmaker. It will provide turnaround opportunities for the company and help it regain its market leadership.”
Vehicles engineered with Volvo technology, such as its GC9 sedan and the Boyue sport-utility vehicle (SUV), have been a hit in China, the world’s biggest auto market.
The five-seater Boyue is in the pipeline for production in Tanjung Malim, Perak, and will be Proton’s first SUV model.
Proton sold 70,991 cars in 2017, lower than the 72,291 units sold in 2016. This was a far cry from the 204,900 units sold by market leader Perodua – the second national carmaker.
Separately, Dr Mahathir also expressed interest in setting up another national car manufacturing company if he didn’t get Proton back.
Prior to the general election, he said the new national car company would become a catalyst for the growth of the country’s engineering know-how and capabilities.
Dr Mahathir believes that many local businesses suffered after Proton was sold to Geely.