Chinese automaker buys stake in Malaysia's Proton

Chinese Automaker Buys Stake in Malaysia's Proton

Production of Lotus cars may have a future in China following the brand's acquisition by Chinese auto company Geely.

DRB-Hicom Berhad has signed an agreement for China's Zhejiang Geely Holding Group (ZGH) to take a 49.9% equity in Malaysian carmaker Proton Holdings Berhad (Proton).

For Geely, the $40 million cash payout is a pittance compared with the 1.3 billion ringgit ($304 million) DRB-Hicom paid to acquire a 42.74% stake in Proton from state investment fund Khazanah Nasional in January 2012.

The definitive agreement between DRB-Hicom Bhd and China's Zhejiang Geely Holding Group (Geely) is worth RM460.3 million.

Citing a highly competitive environment in the SUV market, DRB-Hicom group managing director Datuk Seri Syed Faisal Albar said the characteristic of Boyue and Iris is different in terms of sales and the estimation undertaken by KPMG is much more realistic based on the recent experience.

DRB-Hicom's Managing Director, Datuk Seri Syed Faisal, said Geely, which also owned Sweden's Volvo Cars, London Taxi Company, LYNK & CO and the Geely Auto portfolio of vehicle brands, was the right partner for Proton.

Prime Minister Datuk Seri Najib Tun Razak, who witnessed the signing, said the agreement cements a strategic partnership between the two companies.


DRB-HICOM will retain 50.1 percent stake in Proton.

"The revival of Proton and Lotus will not be an easy task in a market with fierce competition". It bought Volvo from Ford Motor Co.in 2010.

"We will work together for the resurrection of Proton in Southeast Asia. we believe it won't be long before we achieve profitability", he said.

Malaysia, he said, will also become the right hand-drive hub for Geely in this region, enabling the modern Tanjung Malim plant to be used to its maximum capacity, creating new jobs both locally and nationally.

"The government will also reimburse RM1.1 billion to Proton for the amount it had spent on R&D to produce new cars, " he said, adding that Proton had spent a total of RM3.5 billion in the past on R&D.

He hoped that the honest collaboration, would also help Proton regain market share in Malaysia and expand to Asean, while helping Lotus penetrate the global market.

On the RM1.5 billion soft loan given by the government in June a year ago, Syed Faisal said, the government was expected to release the balance of RM250 million as the company had met the conditions set by the government's special task force with the signing of Geely as its strategic partner.

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