DRB-Hicom Awaits Potential Partners’ Bids for Proton

The Malaysian government requires Proton to find a strategic partner as a condition of a 1.5 billion ringgit soft loan issued last year.

Alan Harman, Correspondent

February 10, 2017

2 Min Read
Proton No3 Malaysian automaker after being passed by Honda in 2016
Proton No.3 Malaysian automaker after being passed by Honda in 2016.

Malaysian conglomerate DRB-Hicom says it will retain a significant stake in now-wholly owned Proton after the automaker makes a deal with a foreign strategic partner.

Managing Director Syed Faisal Albar says the potential partners have conducted their due diligence on Proton in recent weeks and DRB-Hicom now is waiting for their bids. “We aim to complete the selection by the first half of this year,” he says in a statement.

The government requires Proton to find a strategic partner as a condition of a 1.5 billion ringgit ($338 million) soft loan issued last year.

DRB-Hicom says it is proud to be the owner of the only indigenous automaker within the 10-country ASEAN trade bloc.

“We have stated before that we will maintain a significant equity in Proton, and this has not changed,” the statement says. “The FSP search is not about shirking our national responsibility, but about enhancing Proton as a bona fide carmaker and eventually putting them, and Malaysia, on the global map.”

DRB-Hicom says it believes Proton can be more successful once a foreign strategic partner is found. This will allow the automaker to revitalize itself through access to new platforms, powertrains and technologies which will broaden its product range and improve quality.

“This revitalization of Proton’s market share underlines DRB-Hicom’s intent to keep the brand as a player in the automotive market,” the statement says.

The parent company is looking for a partner that meets three key criteria: strategic, operational and cultural.

“A strategic fit will enable both parties to derive tangible benefits from the range of technology and products available, which will complement each other’s needs in their own markets,” the statement says. “This strategic fit will also ensure that Proton can achieve economies of scale from its domestic operations.”

DRB-HICOM says it will insist that the Proton badge and its technology first be expanded into ASEAN markets and subsequently the global arena.

An operational fit with the partner will allow both Proton and the partner to complement each other’s strengths: “The structures that exist within each company must be able to blend well so as to achieve seamless operation at Proton and the partner themselves.”

DRB-Hicom says any automaker that is on board with Proton will find both a range of cars to offer specific markets across the globe and the ability to immediately raise production at Proton’s Tanjung Malim Plant, which is running well below capacity.

Proton also has its own in-house R&D, as well as the lightweight-platform technology of its Lotus Cars U.K. subsidiary.

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About the Author

Alan Harman

Correspondent, WardsAuto

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