Time for Proton-Geely to operationalise partnership
KUALA LUMPUR: Now that the definitive agreement has been signed between DRB-Hicom and Zhejiang Geely Holding Group Co, the time has come for Proton and the Chinese auto giant to get down to work to operationalse their mutually rewarding strategic partnership.
With this, the polemics on losing sovereignity, giving up the national identity of the car and selling out to China, must stop for they are baseless political allegations aimed at undermining the government’s resolve to save Proton.
What is important now is that there is an economic solution to rescue Proton out of its financial mess created by a business model that was unsustainable in its early years.
It would not only bring about good business opportunities for both companies, but contribute to the revival of the Malaysian automotive industry and emergence of indigenous brands, regionally.
The goal for Proton, a subsidiary of DRB-Hicom is clear, i.e., to turn around financially and achieve sustainability with Geely’s technical expertise, penetrate export markets and establish an Asean footprint.
In contrast, what good does it make for Proton to continue to be 100 per cent Malaysian- owned but incur hundreds of millions of ringgit in the process and jeopardise the welfare of thousands of workers.
It surely does not make economic sense.
Kudos should go to the government for taking a bold measure to discontinue an archaic business plan that was never going to succeed and DRB-Hicom for landing what is surely the most suitable partner for Proton.
The road ahead for Proton is clear: It must regain its dominance in the domestic market from a mere 12 per cent currently.
Capacity at the Tanjung Malim plant must be maximised by making Malaysia the right hand- drive hub for Geely in the region.
And, if there is excess capacity, the plant would also be given the opportunity to assemble Volvo cars.
Geely wholly owns Volvo, the Swedish car maker.
More importantly, maximising capacity would generate new employment opportunities that is set to benefit hundreds of thousands of Malaysians.
Without a foreign strategic partner, the social costs of more Proton workers being unemployed especially in Tanjung Malim would have far reaching adverse consequences on the domestic economy.
Proton’s Tanjung Malim plant has a capacity to manufacture one million cars annually but only made over 72,000 cars last year with the company reporting a loss of RM1 billion.
Such a state of affairs cannot be allowed to continue, which is why the government has been pushing DRB-Hicom to look for a suitable partner as part of its criteria in giving a RM1.5 billion soft loan.
Undoubtedly, a major strategy from the partnership would be setting the stage for Proton to become one of the leading carmakers in South East Asia and one of Malaysia’s great exports to the region.
DRB-Hicom, last Friday, signed the definitive agreement with Zhejiang Geely Holding to sell 49.9 per cent of Proton to the Chinese conglomerate, which involves a cash injection of RM170.3 million.
It also includes RM290 million for the Geely Boyue model, which would be the first Proton SUV model arising from the partnership.
Under the pact, DRB-Hicom would also hive off sports car maker, Lotus, to Geely for 51 million pounds and the remaining equity to Etika Automotive Sdn Bhd.
Like many other international auto joint ventures, Proton’s partnership with Geely is a norm in the industry and purely a commercial decision that would undoubtedly serve the best interest of the company, its vendors and employees. — Bernama