KUALA LUMPUR – Chinese automaker Zhejiang Geely Holding Group today said it would buy a 49.9% stake in Malaysia’s national carmaker Proton from conglomerate DRB-Hicom – marking another major Chinese auto investment in Southeast Asia.
Geely, parent company of Hong Kong-based Geely Automobile Holdings Ltd and Sweden’s Volvo Car Group, would also acquire 51% of Proton unit Lotus, the companies said. The rest of Lotus goes to Etika Automotive Sdn Bhd – owned by Tan Sri Syed Mokhtar Al-Bukhary, the tycoon who holds the controlling stake in Proton’s parent company, DRB-Hicom – and will see the Proton group exit from the sports car segment.
The investment comes on the back of deals worth billions of dollars signed recently between China and Malaysia, but Proton is an asset wrapped in national pride as an emblem of the country’s 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 hold of 50.1%,” Malaysia’s Second Finance Minister Datuk Seri Johari Abdul Ghani said at a press conference to announce the deal.
“Our very own much-loved brand now has a real chance in making a comeback, a huge one I hope.”
No value for the deal was released, but a statement from DRB-Hicom said an agreement with Geely was expected to be signed in July.
Chinese automakers increasingly see Southeast Asia as a growth market as their technological know-how and vehicle quality improves.
Shanghai-based SAIC Motor Corp moved to build a plant in Indonesia in 2015 and formed a joint venture in Thailand three years earlier, while Dongfeng Motor Group is also interested in the region.
“Japanese automakers already dominate Southeast Asia’s auto market and they make the region a tough place to do business for newcomers. This deal gives Geely an already-established distribution network,” said Yale Zhang, head of Shanghai-based consulting firm Automotive Foresight.
“Geely can inject into that Proton network better technologies and better-quality cars they have developed with Volvo’s help. It’s clear-cut in that sense.”
The vetting process to find a foreign strategic partner for Proton started last year and involved 15 global auto players, which were eventually short-listed to three final candidates, Johari said.
Other companies that have expressed interest in Proton include Peugeot maker PSA, Japan’s Suzuki Motor Corp and French car maker Renault SA.
Geely is expected to offer Proton some of the latest vehicle technologies it has developed with Volvo’s input, with the aim of growing its sales overseas and recovering some of the global presence the Malaysian automaker has lost in recent years.
Founded in 1983 during former prime minister Tun Dr Mahathir Mohamed’s industrialisation push, Proton at its peak boasted of a domestic market share of 74% in 1993.
But subpar cars, poor after-sales service and tough competition from foreign automakers dented profits – with its market share currently at around 15%.
The national carmaker largely rebadges cars of foreign manufacturers to sell in the Malaysian market, but the quality has diminished in recent years.
The Malaysian government handed out a RM1.5 billion financial aid to Proton in April last year, on the condition that the carmaker find a strategic foreign partner soon.
As well as an entry point into Southeast Asia, Proton gives Geely access to right-hand-drive markets around the world, including Malaysia, Britain, India and Australia.
Meanwhile Bernama reported that China’s Geely Automobile Holdings Ltd emerging as the foreign strategic partner for Proton augurs well for Malaysia as the partnership will place the national carmaker on a firm footing towards future growth.
This is in view that Geely has a proven track record of rescuing renowned Swedish automaker Volvo, which it bought in 2010, and sales of the Swedish brand exceeded the half a million mark within five years.
Geely can do the same for Proton, especially in maximising the capacity of its manufacturing plant in Tanjung Malim, as well pushing Proton brands onto the regional and global markets in a big way, analysts said.
Dr Azmi Hassan, a geostrategist, expressed confidence that Proton would henceforth be on the upward growth trajectory, given Geely’s achievement in turning around Volvo and targeting sales to the tune of a million units for 2017.
Geely, which owns 100% equity in Volvo, also wholly-owns the iconic London Taxi Company.
“What Geely did with Volvo’s turnaround, it will do likewise with Proton (and) the Proton-Geely partnership will not only be a ‘win-win’ situation for both parties but also for Malaysia.
“Why would Geely acquire Proton, the only full-fledged car manufacturer in Asean if not to grow it in a region which it has got no footprint?”
Proton’s parent company DRB-Hicom’s perseverance to look for a FSP to revive the national carmaker to ensure its future growth is well-placed.
Yesterday, DRB-Hicom requested a suspension of its shares on Bursa Malaysia. It closed at RM1.68, pending a material announcement.
He said Proton should no longer focus on the domestic market, but make footprints in Southeast Asia and globally through Geely’s capital, as well as their proven auto expertise.
Auto analyst Hezeri Samsuri said that besides Geely having their own successful track record, they managed to boost Volvo’s performance to be even better than when Ford owned Volvo before.
Proton’s deal with Geely translates to growth in manufacturing, new car models, transfer of technology and platforms, increased employment opportunities, and bigger orders for Malaysian vendors, he said.
He said Proton should also strive to sell the national car to the vast China’s market, given the partnership between Proton and Geely.
Another analyst requesting anonymity said a major plus point Proton derives from the partnership is that Geely is an “entrepreneur-driven” auto company and one of the few left in the world as opposed to car firms owned by state enterprises and multinationals.
Geely’s founder Li Shufu, sometimes referred to as the “Henry Ford of China,” is a self-made entrepreneur who started building cars in 1998. Geely chalked up car sales of 1.3 million units in February last year.
– http://www.therakyatpost.com
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.