A Company From China Might Take Control Of Proton In The Near Future
The national carmaker is gearing up for some major changes.
By John Lim — 13 Feb 2017, 06:15 PM
The local automobile market has been abuzz with Proton's pursuit for a foreign partner and one name keeps popping up - China's Geely Automobile Holdings
Proton began the process of identifying potential foreign parties back in June 2016 by sending out proposals to 14 different original equipment manufacturers (OEMs).
According to The Star, three parties were selected - China's Geely as well as French carmakers PSA Group and Renault SA.
Geely - based in the Zhejiang provincial capital of Hangzhou - is the leading contender to buy a 51% controlling stake in Malaysia’s largest carmaker Proton
According to The Star's sources, PSA and Geely are actively undertaking due diligence work at Proton’s headquarters but the latter appears to show more interest.
“Between the two, Geely appears to show more interest. Both are busy with their due diligence at the moment, you can see both Geely and PSA officials at Proton’s headquarters almost everyday,” the unnamed source said.
The Chinese carmaker, which only produced its first car in 1998, has undergone massive changes over the years and even purchased Volvo Cars from Ford in 2010 as well as the London Taxi Company.
Should the deal go through, Geely will get access to Proton’s assembly line in Malaysia
The assembly line in question is based in Tanjung Malim, with annual production capacity of 150,000 vehicles in two shifts.
Owning a car assembly in Malaysia also qualifies its owner to ship vehicles tax-free anywhere among the 10 members of the Association of Southeast Asian Nations, or Asean, with a combined population of 623 million people.
The government has also given the green light for foreigners to own a majority stake in the company, saying that it could be a major turnaround for Proton
Second finance minister Datuk Seri Johari Abdul Ghani said that a foreign partner with new technologies and better cars would crucially help boost Proton beyond just relying on domestic consumption with an unsustainable production rate of just 200,000 to 300,000 units per annum.
"We are making cars only for Malaysia, and this is not sustainable with a population of only 31 million. We also have Perodua and other car assembly brands.
I think it is all about volume, as well as quality and technology, alongside a good design. These are all the ingredients needed for a better car which people would buy," he said as quoted by Carsome.
DRB-Hicom Berhad - the current 100% owner of Proton - remains committed to bringing back the company back to its glory days, and finding the right partner is critical to that goal
With the entry of a foreign partner, Proton can revitalise itself through access to new platforms, powertrains, and technologies which will further improve Proton’s range of products and its quality.
However, DBR-Hicom has maintained that it will continue to hold a significant stake in Proton after the partner's entry.
"We have stated before that we will maintain a significant equity in Proton, and this has not changed,” DRB-Hicom group MD Datuk Seri Syed Faisal Albar said.
The shortlisted parties will have until Wednesday, 15 February to submit their proposals. After the deadline, Proton will deliberate and make a selection.
Due to the fact that Proton is a fully privatised company, the government will not be an active participant in the selection.
"Going forward, the government should allow the private sector to do business, but won’t itself be involved in it,” Johari said.