Proton Headed for China

Malaysia’s Proton Holdings and China’s Zhejiang Geely sign an agreement to set up a joint venture for production of Proton vehicles in China.

DRB-Hicom, which owns 50.1% of Proton, announced the deal at the Kuala Lumpur Stock Exchange. Geely owns the remaining 49.9% stake in Proton.

The yet-to-be-named 50/50 JV is expected to be incorporated in first-half 2019, subject to regulatory approval.

DRB-Hicom says the venture includes a production facility in China and the development of a network of local dealers to market the Proton range.

The portfolio of cars for China primarily will come from existing Geely platforms, although the external design of the vehicles will be undertaken by Proton. The agreement also provides for suitable Proton platforms to be developed into models for the Chinese market.

DRB-Hicom Group Managing Director Faisal Albar says Geely’s entry as a strategic partner with Proton has paved an easier route for the Malaysian car maker’s move into the lucrative Chinese market.

“Clearly with Geely on board, Proton’s route into China has become more tenable,” Faisal says in a statement. “Part of Geely’s role is to secure the manufacturing licenses and regulatory approvals required for such a venture under China’s regulations. Geely will also identify a suitable location where the manufacturing facility is to be based.”

Existing Proton suppliers that produce quality parts and have a competitive edge also could win business from the JV company.

“This should sit well with the government of Malaysia that has often prodded Malaysian component makers to venture into the Chinese market,” the DRB-Hicom statement says,

“Prime Minister Mahathir Mohamad had lamented previously the lack of Malaysian car exports into regional markets, despite Japanese, South Korean and Chinese brands making their way onto Malaysian shores.”

China’s passenger-vehicle sales have grown from 6.76 million units in 2008 to more than 24 million units in 2017. Geely was the first privately owned Chinese automaker to sell more than 1 million units domestically in a calendar year. In 2017, it sold more than 1.24 million units, carving out a 5.1% market share.

In the first half of this year, Geely moved an average 125,000 units a month, with the Boyue SUV passing the 20,000 mark every month except in January, when more than 30,000 were sold.

A localized version of the SUV is to be launched in Malaysia in the final quarter of 2018 as Proton’s first-ever SUV.