Chinese automaker buys stake in Malaysia's Proton

25 June, 2017, 02:08 | Author: Alicia Barber
  • Chinese Automaker Buys Stake in Malaysia's Proton

"Whatever spending [we will make] will depend on what Proton will be, in terms of its long-term product planning [such as which market segments the company will enter]".

Chinese automaker Zhejiang Geely Holding Group agreed on Friday to purchase stakes of 49.9% in Proton Holdings of Malaysia and 51% in Lotus of the United Kingdom, both owned by Malaysian automotive group DRB-Hicom, for a total of $235 million.

Proton had acquired the British marque in 1996 and many of its cars benefited from tuning by Lotus.

DRB Hicom today signed the definitive agreement with Zhejiang Geely Holding Group (Geely) to sell 49.9 per cent of Proton Holdings Bhd's equity to the Chinese conglomerate.

Geely Holding Group's announcement Friday gave no financial details.

Under the deal, DRB-Hicom is also selling its entire stake in British sports automaker Lotus, with Geely taking a majority interest at 51 per cent for £51 million (S$90 million). Geely's main goal with both Proton and Lotus is to ensure both brands are profitable and enjoy sustainable growth, objectives that will be achieved in part by embracing electrification and lightweighting technologies, along with artificial intelligence.

But he did not rule out the possibility that the production of Lotus will be brought to China, now the world's largest auto market.

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Geely is the parent company of Volvo, where it has carried out a successful turnaround of the business since acquiring it in 2010.

Li also said Geely will make Malaysia a manufacturing hub for right-hand drive vehicles for its global sales. The government has long resisted efforts to sell off any key stake in Proton, seen as a national icon.

Najib said Proton had been in trouble, and the government was called upon to help the struggling firm with a soft loan, extended in 2016.

"This is the beginning of a new era for Proton. we want to expand its footprint in the region", he added.

Najib said the government extended the loan to Proton because, had the carmaker shut down, 10,000 employees would have become jobless, and the eco-system surrounding Proton, which accounts for some 200,000 jobs, would have suffered.

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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