Reports Say PSA May Bid for Malaysia’s Proton

PSA Peugeot Citroen reportedly interested in making a bid for struggling Malaysian national automaker Proton.

The Edge weekly newspaper first reported this and the government’s Bernama news agency reports Seri Idris Jala, leader of a government-appointed Proton rescue team, has traveled to Paris to meet with executives with the French automaker.

Auto-industry columnist Yamin Vong says in a Bernama report that Proton is back to square one – rebadging the Honda Accord for its Perdana model, while the Inspira is a Mitsubishi Lancer in everything but name.

“The state it is in now reflects the original criticism that a national car company in Malaysia does not have the economies of scale to invest in research and development and to amortize the costs in a small domestic market,” Vong says.

But as expected, he says, Proton managers generally are not in favor of the PSA groupʾs bid.

“This is to be expected whenever a takeover bid looms,” Vong says. “Also, the perception that the Proton culture is one that rejects changes is very credible. When a company is targeted for acquisition, its employees will not be happy. Given a chance, most of its managers will reject the change.”

It’s a dance that has been shuffling around boardroom floors for years.

In 2007, Proton had General Motors, Volkswagen and PSA on its dance card, but eventually went home alone. Five years later it unsuccessfully tried to rekindle its romance with GM.

This time around there could be a shotgun marriage.

Vong says when the government recently gave Proton a 1.5 billion ringgit ($365 million) loan so it could pay suppliers, it set out conditions, including the sale of a controlling stake to a technology-rich automaker seeking entry into the ASEAN market.

But the ASEAN market is controlled by Japanese brands Toyota, Honda and Nissan, and Vong says they won’t be interested in Proton as an export-oriented partner because this would disrupt their captive markets in Indonesia, Thailand and Malaysia.

The more likely bidders are expected to be those without an ASEAN presence but eyeing a significant share of the region’s growing sales.

Vong says this could include European automakers such as PSA and the Renault-Nissan Alliance; South Korea’s Hyundai/Kia group; and Chinese brands such as Great Wall and SAIC’s Roewe.

He says Hyundai/Kia could be a contender as the group has spent little on manufacturing activities in ASEAN and “will eagerly eye a share in the region” through Proton.

Neither the Malaysian government nor Proton and its owner DRB-Hicom, which bought the automaker in 2012, are commenting publicly on the reports regarding possible bids for Proton.