The Proton Persona. Geely sees Proton as a vehicle to expand further into South-East Asia.
PUTRAJAYA: It's official. DRB-Hicom Bhd is selling a 49.9% stake in loss-making Proton Holdings Bhd to China-based Zhejiang Geely Holding Group Co., Ltd (Geely Holding).
The deal will also see Proton exiting its stake in British carmaker Lotus. Geely is taking a 51% stake in Lotus and Etika Automotif Sdn Bhd the other 49%. Etika Automotif is owned by tycoon Tan Sri Syed Mokhtar Al Bukhari.
The two parties signed the agreement here, witnessed by Second Finance Minister Datuk Seri Johari Abdul Ghani.
The entrance of Geely as a foreign strategic partner would revitalise Proton which booked about RM1bil in net loss for the financial year ended March 31, 2016.
DRB-Hicom said today it had reached an agreement for the sale of the stake. Both parties expect to sign the definitive agreement in July 2017. It currently owns 100% of the manufacturer of the first national car.
Geely, which already owns Volvo brand and The London Taxi Company, would be expanding its reach into the South-East Asia region through Proton.
The Lotus Evora Sport 410. Geely is taking a 51% stake in Lotus.
Proton has a ready capacity in its plan located in Tanjung Malim. The plant has annual production of 150,000 cars and designed to have a maximum capacity of one million units per year.
DRB-Hicom has been on the lookout for an international partner for Proton. PSA, a French carmaker and the owner of Peugeot and Citroen brands, was also said to be one of the suitor for Proton.
The deal will enable Proton to tap into Geely Holding’s vast range of platforms and powertrains, and will also enable Proton to have access to existing markets of the Chinese carmaker, as well as right-hand drive markets in South-east Asia. The deal could see Proton rebadging the Geely Boyue to introduces its first SUV.
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The Boyue compact SUV.
The deal with Proton will offer Geely access into the key Asean market, and also R&D and manufacturing presence in the region.
DRB-Hicom group managing director, Datuk Seri Syed Faisal Albar says the Proton brand will remain present and will grow significantly with the new foreign strategic partner on board.
"Our intention was always to ensure the revitalisation of the Proton nameplate. It was Malaysia’s first national car brand and has more than 30 years of history. This deal will be the catalyst to elevate a brand that Malaysians resonate with,” said Syed Faisal.
Geely Holdings is one of the leading passenger vehicle carmakers in China. It has facilities across the globe, including 16 plants, seven design studios and five research & development centres.
Johari said the government would reimburse Proton RM1.1bil as a grant for money spent on research and development (R&D) in the past.
He said Proton had spent RM3.5bil on R&D. Johari also said there would be no more "subsidy" for Proton from now on.
Proton, founded in 1983 by former Malaysian premier Tun Dr Mahathir Mohamad, received RM1.5bil in government aid last year on condition that it pursue a turnaround plan and seek a foreign partner.
Other potential bidders have included PSA, the Paris-based maker of Peugeot and Citroen cars, its domestic rival Renault and Japan's Suzuki Motor Corp.
