Taking new steps toward China

PROTON Holdings Berhad and Zhejiang Geely Holding Group (Geely) last week signed a Heads of Agreement to set up a jointventure to pave the way for Proton to assemble and market its cars in China.

Both companies are to take up equal equity in the yet-to-benamed joint-venture company (JVC).

DRB-Hicom Berhad said the venture includes the set-up of a production facility in China which will assemble vehicles, and the development of a network of dealers to market Protons in China.

The portfolio of cars for China will primarily come from existing Geely platforms, although the external design of the vehicles will be undertaken by Proton itself. However, the agreement also provides for existing Proton platforms that are found suitable to be developed into models for the Chinese market.

DRB-Hicom group managing director Datuk Seri Syed Faisal Albar said Geely’s entry as Proton’s strategic partner has paved an easier route for Proton’s entry into the lucrative Chinese market.

Part of Geely’s role is to secure the manufacturing licences and regulatory approvals required for such a venture under China’s regulations. Geely will also identify a suitable location where the manufacturing facility is to be based at.

Syed Faisal said that existing Proton component vendors that have quality and competitive edge may also be considered as suppliers for the JV company.

China’s passenger car sales have grown tremendously over the last 10 years. In 2008, 6.76 million passenger cars were sold in China – over 24 million units in 2017.

In 2017, it sold more than 1.24 million units, carving out a 5.06% market share. In the first six months of 2018, it was an average of over 125,000 units of Geely models a month, with the Boyue SUV passing the 20,000 mark every month except in January, when more than 30,000 were sold.

The localised version of the SUV is set to be launched in Malaysia in the final quarter of 2018 as Proton’s first-ever SUV.

Both parties target to incorporate the JV within the first half of 2019, subject to obtaining all regulatory approvals.

Standing from left: Geely chairman Li Shufu, Prime Minister Tun Dr Mahathir Mohamad and China ambassador to Malaysia Bai Tien. Seated from left: Chief operating officer of DRB-Hicom and Proton board of director Shaharul Farez Hassan, Syed Faisal, Geely president and CEO An Conghui, and Geely executive vice-president and chief financial officer Daniel Li.