Change is finally arriving at Proton as Parent company DRN-Hicom yesterday signed a Definitive pact with Zhejiang Geely Holding Group. The pact would see ZGH Geely assume a 49.9% stake in Proton. On the same day, Proton also sold its entire stake in Lotus Advance Technology to ZGH and Etika Automotive.
With the agreement in place, Proton now becomes the right-hand hub for Geely in the Asian region and will be able to tap on the region’s accumulative 2.1 million passenger cars sold in 2016. In the domestic scene, Proton, with Geely as partners, hopes to dethrone Perodua as the country’s best-selling car brand.
Following the signing agreement, Proton’s current Chief Syed Faisal Albar said, “ZGH, which also owns Sweden’s Volvo Cars, The London Taxi Company and the Geely car brand, is the right partner for Proton. Their success with Volvo and The London Taxi Company, and of course their own Geely marque shows their capability both as a bona-fide carmaker and as a partner. With ZGH on board, Proton can now eye the huge ASEAN passenger car market with renewed confidence.”
“Proton’s status as a National Car is secure, with DRB-Hicom still a majority shareholder. Proton will now focus their efforts with ZGH to gain market share domestically. With the joint capabilities of both companies, I am positive that we will be able to impact the market positively, by coming out with products that meet market preferences in terms of design and quality,” he added.
ZGH Geely is equally positive about the pact with DRB-Hicom, including the acquisition of Lotus. ZGH Geely’s Chairman Li Shufu said, “For Lotus, we will increase new product launches and capacity to fully release its brand appeal. Proton and Lotus will create synergies for ZGH to position ourselves as a major player in the region’s market, which in turn will enhance our global position and help us achieve sales target of 3 million units by 2020. We have every reason to expect a shared and bright future based on the values of respect, adaptation, inclusion and integration.”
With the sale of Lotus, DRB-Hicom has exited the sports car segment. The sale allows Proton to focus on passenger cars, which is a larger market. Proton had acquired the British sports carmaker in 1996 and several models have benefited from tuning by Lotus.
ZGH Geely first garnered attention in the global automotive industry in 2010, when it boldly acquired Sweden’s Volvo Cars. The deal raised many eyebrows especially in Europe, but after heavy investments into the carmaker, in 2016 it recorded an operating profit of US$1.25b, the highest ever since its formation in 1927.
Their next acquisition, the London Taxi company saw ZGH infuse huge investment to turn things around. The Chinese conglomerate committed US$370m towards producing an electric version of the iconic Black Cabs that run around the city of London. The move is to comply with new environmental requirements for London, in a move to reduce air pollution in the city.
In its home country, the Geely marque sold some 760,000 cars in 2016, doubling the figures from the year before. The growth rides on the popularity of the SUV segment, with Geely’s Boyue SUV proving to be very popular in China. TO date, Geely has sold over 109,000 units of Boyue in 2016, and another 103,000 units, up till May this year.