Geely in pole position to buy Malaysia’s Proton
Saudi Aramco might have said good bye to investment in Malaysia’s oil industry, but the Chinese are about to fill the void in another sector, vehicles. Hangzhou-based car maker Geely is said to have the best chances in a bidding round for Malaysia’s flagship car brand Proton and its manufacturing plant.
Reportedly, Geely is leading a three-bidder race for Proton, ahead of French carmakers PSA Group and Renault, all of which are keen to acquire a 51 per cent stake in Proton’s manufacturing plant in Tanjung Malim, Perak, and enter a close technical cooperation. The net book value of the Tanjung Malim plant was about $113 million as of 2016.
The successful bidder will get access to Proton’s assembly with an annual production capacity of 150,000 vehicles. Owning a car assembly in Malaysia also qualifies its owner to ship vehicles tax-free anywhere among the ten member states of the Association of Southeast Asian Nations, or ASEAN, with a combined population of 623 million people.
Proton, incorporated in 1983 as Malaysia’s first indigenous car brand with the help of Mitsubishi, has ever since been far from commercial success and a drain to its owners, formerly Malaysia,’s sovereign wealth fund Khazanah Nasional, and currently industrial conglomerate DRB-HICOM. Proton sold 72,290 vehicles last year compared with 102,175 units in 2015 and survived mainly with the help of government loans.
According to analysts, the successful bidder will have to spend at least one or two years to turn around Proton and give the brand a better footing in Southeast Asia, a market dominated by Japanese and South Korean brands, although the Chinese are gaining ground. The potential buyer will also need to provide support in terms of advanced technology, global sales and economies of scale.
Geely, founded in 1986, initially built motorcycles and engines and began producing automobiles only in 2002. From then on, the company started an international expansion and acquired an Australian drive train producer in 2009, Swedish car maker Volvo from Ford in 2010, and The London Taxi Company in 2013.
One of the motivations to acquire Proton is also Geely’s long-time interest in British sports car firm Lotus Cars, which is majority-owned by Proton since 1996 and with which Geely has been in discussions for a potential technological cooperation.
Geely in January announced a 2017 sales target of one million vehicles, an increase of 34 per cent from last year. The company forecast its 2016 net income to more than double from around $330 million in 2015.
Saudi Aramco might have said good bye to investment in Malaysia's oil industry, but the Chinese are about to fill the void in another sector, vehicles. Hangzhou-based car maker Geely is said to have the best chances in a bidding round for Malaysia's flagship car brand Proton and its manufacturing plant. Reportedly, Geely is leading a three-bidder race for Proton, ahead of French carmakers PSA Group and Renault, all of which are keen to acquire a 51 per cent stake in Proton’s manufacturing plant in Tanjung Malim, Perak, and enter a close technical cooperation. The net book value of the...
Saudi Aramco might have said good bye to investment in Malaysia’s oil industry, but the Chinese are about to fill the void in another sector, vehicles. Hangzhou-based car maker Geely is said to have the best chances in a bidding round for Malaysia’s flagship car brand Proton and its manufacturing plant.
Reportedly, Geely is leading a three-bidder race for Proton, ahead of French carmakers PSA Group and Renault, all of which are keen to acquire a 51 per cent stake in Proton’s manufacturing plant in Tanjung Malim, Perak, and enter a close technical cooperation. The net book value of the Tanjung Malim plant was about $113 million as of 2016.
The successful bidder will get access to Proton’s assembly with an annual production capacity of 150,000 vehicles. Owning a car assembly in Malaysia also qualifies its owner to ship vehicles tax-free anywhere among the ten member states of the Association of Southeast Asian Nations, or ASEAN, with a combined population of 623 million people.
Proton, incorporated in 1983 as Malaysia’s first indigenous car brand with the help of Mitsubishi, has ever since been far from commercial success and a drain to its owners, formerly Malaysia,’s sovereign wealth fund Khazanah Nasional, and currently industrial conglomerate DRB-HICOM. Proton sold 72,290 vehicles last year compared with 102,175 units in 2015 and survived mainly with the help of government loans.
According to analysts, the successful bidder will have to spend at least one or two years to turn around Proton and give the brand a better footing in Southeast Asia, a market dominated by Japanese and South Korean brands, although the Chinese are gaining ground. The potential buyer will also need to provide support in terms of advanced technology, global sales and economies of scale.
Geely, founded in 1986, initially built motorcycles and engines and began producing automobiles only in 2002. From then on, the company started an international expansion and acquired an Australian drive train producer in 2009, Swedish car maker Volvo from Ford in 2010, and The London Taxi Company in 2013.
One of the motivations to acquire Proton is also Geely’s long-time interest in British sports car firm Lotus Cars, which is majority-owned by Proton since 1996 and with which Geely has been in discussions for a potential technological cooperation.
Geely in January announced a 2017 sales target of one million vehicles, an increase of 34 per cent from last year. The company forecast its 2016 net income to more than double from around $330 million in 2015.
