Geely buys 49.9% stake in carmaker Proton
GEELY, the owner of Sweden’s Volvo Car Group, is to buy 49.9% of struggling Malaysian carmaker Proton from conglomerate DRB-HICOM Bhd, marking the Chinese firm’s first push into Southeast Asia.
Zhejiang Geely Holding Group Co Ltd, parent of Hong Kong-based Geely Automobile Holdings Ltd, will also acquire 51% of Proton’s stake in British carmaker Lotus.
The companies did not disclose the value of the deals.
The investment comes on the back of deals worth billions of dollars signed recently between China and Malaysia, but stands out as formerly state-owned Proton is often regarded as an emblem of post-independence industrialisation and economic growth.
“Proton will always remain a national car and a source of pride, as Proton will still have a majority holding of 50.1%,” Malaysia’s Second Finance Minister, Johari Abdul Ghani, said.
“Our very own, much-loved brand now has a real chance in making a comeback, a huge one I hope.”
People close to the negotiations said Geely had hoped for a stake of at least 51%, but industry experts said Geely could still take a lead in defining Proton’s future, having significantly strengthened its vehicle technologies since buying Volvo.
“Geely has validated the model of using their Volvo technology platform to create good products. That should be the same for Proton,” James Chao, Shanghai-based Asia-Pacific chief of consultancy IHS Markit Automotive, said.
Geely would take a leadership role in areas including production, manufacturing, sales and marketing, DRB-HICOM, which will handle distribution, said.
The deal is expected to be signed in July.
Proton was founded in 1983 during an industrialisation push of former prime minister Mahathir Mohamed.
Its domestic market share peaked at 74% a decade later as drivers took advantage of cheap loans as the government encouraged Malaysians to buy home-grown products.
But lower-standard cars, limited after-sales service and competition from foreign carmakers saw its domestic market share drop to around 15% last year.
Proton largely assembles cars designed by foreign carmakers and re-badges them mainly for the local market, though it does have a small international presence – including North Korea, where its cars are commonly used as taxis.
Its two factories can produce 400 000 cars, but are not running at full capacity.