It’s official, DRB-HICOM Berhad and Zhejiang Geely Holdings (Geely) have just signed a Definitive Agreement to appoint Geely as Proton’s Foreign Strategic Partner (FSP). The deal will see Geely acquire a 49.9 percent stake in Proton for RM460.3 million in cash as well as the Boyue SUV platform.
Of the RM460.3 million, RM170.3 million is of cash injection from Geely while the remaining sum (valued at RM290 million) makes up for the Boyue platform. DRB-HICOM has also disposed all 100 percent ownership of Group Lotus for £100 million (RM545 million) with 51 percent going to Geely and 49 percent going to Etika Automotive Sdn Bhd.
The deal came about after Proton received a RM1.5 billion soft loan from the Government with the condition that the national carmaker appoints a foreign strategic partner as part of its turnaround plan.
According to Dato’ Sri Syed Faisal Albar, Group Managing Director DRB-HICOM berhad, Proton has approached 23 potential partners, invited 15, shortlisted five and finally decided on Geely. Proton eventually chose Geely due to their outstanding portfolio as a carmaker, especially with Geely’s success in China as well as turning around Volvo and London Taxi Company.
Dato Syed Faisal highlighted the six major benefits for Proton from this partnership:
1) Access to Geely technologies
Proton will have direct access to Geely Automotive Group’s products, platforms and latest technologies. Geely will also help Proton (and Lotus) to embrace electrification and artificial intelligence applications.
2) Access to ASEAN and China Markets
Geely intends to help Proton regain a foothold in Malaysia as well as the ASEAN region. However, Li Shufu, Chairman of Zhejiang Geely Holding Group expressed that their immediate focus is to reclaim Proton’s position as Malaysia’s best-selling car brand.
3) Proton to manufacture Geely’s RHD Models
To date, Geely vehicles are only available in left-hand drive. This partnership will allow Geely to manufacture right-hand drive vehicles of their own marque at Proton’s Tanjung Malim plant.
4) Proton R&D to become Geely’s Centre of Excellence in ASEAN
With Proton’s 30 years of experience in automobile development and market research, Proton’s research and development operations will become the benchmark and guidance for Geely in the ASEAN region.
5) Local vendors to join Geely’s Global Shared Purchasing System
Local vendors of Proton will have a chance to be part of Geely’s global supply chain provided they meet the necessary requirements and standards. For example, if Volvo requires a specific part for their cars, local vendors are able to be one of Volvo’s supplier.
6) Tanjung Malim to assemble Volvo Models
Volvo will be able to use the production facility should there be room for more productivity. This will supplement Volvo’s existing manufacturing plant in Shah Alam.
The first car to be conceived from this Geely-Proton partnership is the Geely Boyue SUV here in Malaysia. Dato Syed Faisal said that Proton is currently examining the best course of action to introduce the Boyue SUV. Among the challenges are whether to bring in a batch of CBU units, localisation content and features to suit the local market.
Proton says this Definitive Agreement is not a way of ‘selling out’ the brand to a foreign company. DRB-HICOM remains the majority shareholder of Proton. Besides that, Li Shufu expressed that this acquisition is more of a partnership with DRB-HICOM to revitalise the Proton and Lotus brands than an outright acquisition of assets. Regardless, we Malaysians can expect better things from Proton in the near future. Fingers crossed.