Chinese auto giant Geely on Wednesday stepped up its global expansion drive with a 49.9 percent stake in Malaysia’s troubled Proton as well as a 51 percent share in British sports car brand Lotus.
The deal would allow the automaker to “strengthen our global footprint and develop a beachhead in Southeast Asia,” a region of more than 650 million people, Geely Holding executive vice president Daniel Donghui Li said.
Proton’s parent DRB-HICOM said the arrangement would enable Proton, Southeast Asia’s first auto brand, to tap Geely’s technology and access existing markets of the Chinese manufacturer.
Geely Holding already owns Sweden-based Volvo Car Corporation, which has made a remarkable comeback since it was sold by the Ford Motor Company in 2010. Geely also bought The London Taxi Company in 2013.
The financial terms of the Proton deal were not disclosed at a joint news conference in Kuala Lumpur.
However, DRB-HICOM group managing director Syed Faisal Albar said Proton’s 100 percent stake in Lotus was sold for 100 million pounds ($130 million).Â
Geely took 51 percent of Lotus while a Malaysian firm, Etika Automotive Sdn Bhd, bought 49 percent.
“We will take into consideration Geely’s cash injection and one SUV product from Geely,” Syed Faisal said.
Malaysia’s Second Finance Minister Johari Abdul Ghani said in a speech at an event announcing the deal that DRB-HICOM initially invited 15 global auto players to bid to become a foreign strategic partner.
– Proton’s suitors –
French car-makers Peugeot and Renault “were among the last eight shortlisted bidders for the Proton stake,” Syed Faisal of DRB-HICOM told reporters.
“Our intention was always to ensure the revitalisation of the Proton nameplate,” Syed Faisal said.
“It was Malaysia’s first national car brand and has more than 30 years of history. This deal will be the catalyst to elevate a brand that Malaysians resonate with.”
In a statement, Geely Holding said both parties expect to sign the “definitive agreement” for the Proton and Lotus deals before the end of July.
“This agreement lays the foundation for a wider framework for both Geely Holding and Proton and Lotus to explore joint synergies in areas such as R&D (research and development), manufacturing and market presence,” Geely said.
Geely Group was founded by businessman Li Shufu, the son of rice farmers, who is also seeking to expand his business to the finance sector. Earlier this month it became the largest shareholder in Danish bank Saxo by buying around 30 percent of its capital.
Proton was formed in 1983 by then-Prime Minister Mahathir Mohamad as part of an ambitious national industrialisation plan, but has suffered from a reputation for unimaginative models and shoddy quality.
With government support, Proton initially dominated the domestic market but subsequently struggled with making profits, and hopes of marketing the vehicle as a car for Southeast Asia fizzled out.
Proton sold 180,000 cars annually at the height of its popularity, but the Malaysian Automotive Association said only 72,290 units were taken last year, down 60 percent. – Agence France-Presse
