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Geely signs agreement to be Proton’s foreign technical partner, acquires 49.9% equity

POSTED BY Yamin Vong ON 24 May 2017

Finally the end of a dead-end road for Proton, and the opening of what is hopefully a highway to the future in partnership with China-based Geely group.

For those wondering what is the purpose of a minority 49.9 per cent stake, it must be pointed out that Toyota Motor Corp has a minority stake in both UMW-Toyota and Perodua and yet plays a dominant role because it owns the technology.

Similarly for Geely, it will have a minority stake and yet it owns both the technology and design capability.

In terms of management, Geely acquired Volvo in 2010 and the iconic Swedish car maker hasn’t looked back since.

Volvo is now in the top ranks of the world automotive industry in terms of electrification and autonomous driving.

It’s understood that Geely’s acquisition of Proton will have two elements: One will be the use of Proton’s Tanjung Malim plant for production of Volvo’s electric-petrol hybrids including the flagship XC-90.

The second front will be to build Proton as a challenger for the Asean market.

It won’t be a walk in the park because Shanghai Automotive Corporation (SAIC) has already marked out its plan for Asean market domination via Roewe.

Remember when the Rover car company was almost bankrupt and sold by the British government.

SAIC bought the MG name plate, some of the intellectual property and the entire manufacturing line but not the Rover nameplate.

It created Roewe – sounds alike Rover – for the China domestic market. About five years ago it started marketing the Roewe brand in Thailand. Later, in a 1.8 billion RMB joint venture with Thailand’s CP conglomerate, it assembled the MG6 and the Roewe 360.

We should hope that what SAIC is doing in Thailand, Geely can do better with Proton in Malaysia and for Asean markets.

I said it won’t be an easy task because the Thai automotive eco-system is awesomely competitive compared to Malaysia where vendors are disadvantaged by a small market size.

Hopefully with a regional market and the strength of Geely as a privately owned company versus SAIC’s government ownership, the Geely Proton JV will blossom.

Politicians must now focus on assisting all the companies in the automotive industry rather than choosing one or two champions to support.