Tok Pa: Geely deal is good for Proton

PETALING JAYA: The acquisition of a 49.9% stake in Proton by China’s carmaker Geely will open a bigger market for Proton cars as well as allow Proton to tap into the Chinese automaker’s technology, Datuk Seri Mustapa Mohamed said.

In welcoming the partnership with DRB-Hicom, the International Trade and Industry Minister said the deal would enable Proton to access the existing markets of the Chinese carmaker, especially in China as well as right-hand drive markets in South-East Asia.

“The partnership will also allow Proton to tap into Zheijiang Geely Automotive Co Ltd’s technology and research and development facilities, including a range of platforms and power trains,” he said in a statement yesterday.

Proton and Geely signed an agreement on Wednesday that would see Geely take a 49.9% stake in Proton and a controlling stake in Lotus, the British sportscar maker, from Proton. Both parties have not finalised the price Geely would pay for the stake in Proton.

Mustapa said the Government was confident that Geely would provide a boost to Proton’s sales performance and bottom line.

“I am sure this is a development long awaited by the 350 parts and components manufacturers as well as support and services-related vendors under the Proton ecosystem,” he said.

He said the decision took into account the interests of the company, its 10,000 employees and another 50,000 workers in its supply chain.

Geely has a proven track record and is one of the top Chinese automotive companies, Mustapa added.

“For example, its sales in China grew 50% last year to 766,000 vehicles. Its acquisition of Volvo in 2010 has been a success.

“Volvo recorded sales of 540,000 vehicles last year, an increase of over 200,000 units sold in 2009 prior to the acquisition,” he said.

Mustapa said the deal could also fully realise the potential of Proton’s production plants in Tanjung Malim and Shah Alam which have a combined capacity of 380,000 units.

“Proton exported 301 units last year, while in the past it used to export around 20,000 units annually. With this partnership, it is hoped that Proton’s exports will pick up once again and allow it to achieve economy of scale,” he said.

Mustapa also said the total exit of Lotus from Proton would remove one of the main challenges faced by Proton in about a decade.