'That big Chinese auto company' just got bigger.
Automotive conglomerate Zhejiang Geely has signed a deal that will see it acquire a 49.9% equity stake in embattled Malaysian carmaker PROTON, with former parent company DRB-Hicom retaining the majority stake. As part of the deal, DRB-Hicom will be selling Lotus to the Chinese group in its entirety, with a 51.1% stake transferred to them for £100mil (or just under $173mil in our money).
This marks the end of PROTON’s search for a foreign strategic partner, which was part of a deal it inked with the Malaysian government when the latter provided a large soft loan to the loss-incurring company to remain solvent. Lotus was offloaded as the (also loss-incurring) sports car specialists commanded great capital expenditure obligations (in pound sterling, no less), and will allow DRB-Hicom to cut its losses and use the proceeds from the sale for future investments.
On the latter, DRB-Hicom group managing director Syed Faisal Albar said that with the sale of Lotus, the DRB-Hicom group would no longer be involved in the sports car business. For PROTON, Syed Faisal said, “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 [with Geely] will be the catalyst to elevate a brand that Malaysians resonate with.”
For Geely, the acquisition of PROTON will allow them to finally get a foothold in the right-hand drive market, where it was previously absent. With the deal, the Chinese carmaker will also get to fully-utilise PROTON’s large (and underused) manufacturing facility in Tanjung Malim, two hours outside the capital city of Kuala Lumpur, and capitalise on the plant’s six-figure annual production capacity. This will likely see the assembly of Lynk & Co. vehicles (another Geely-owned marque), while there are rumours circulating that it may also assemble Volvo vehicles in the future.
The deal also sees the closure and transfer of PROTON’s 250-acre manufacturing facility in Shah Alam, the factory that produced the first PROTON cars back in 1985. This facility will be handed back to DRB-Hicom, which says that its intentions with that parcel of land will be determined at a future time.
Geely group vice president & CFO Daniel Donghui Li said, “With PROTON and Lotus joining the Geely Group portfolio, we strengthen our global footprint and develop a beachhead in Southeast Asia. Geely Holdings is full of confidence for the future of PROTON; We will fully respect the brands’ history and culture, to restore PROTON to its former glory with the support of Geely’s innovative technology and management resources. We also aim to unleash the full potential of Lotus Cars and bring it into a new phase of development, thanks to our experience accumulated through Volvo Cars’ revitalisation.”
Following the announcement, a Q&A session revealed that PROTON will soon be looking to develop its first-ever SUV, based on the Geely Boyue. With PROTON’s presence in the Australian market relatively small, it’s foreseeable that future vehicles developed hand-in-hand with the Geely group may find their way to our shores, and drive value the way they always have.