Proton Owner Wants to Bring VW Production to Malaysia

Proton owner DRB-Hicom is reported drawing up ambitious plans to make Malaysia a hub for the production of Volkswagen vehicles.

The government’s Bernama news agency says to make this happen, DRB-Hicom owner Mokhtar Al-Bukhary is working to list the company’s distribution arm on the stock exchange.

Proton distributors Proton Edar and EON would be merged and listed, while DRB-Hicom itself might be delisted.

Bernama says under this option, DRB-Hicom's automotive manufacturing arm and defense unit would be held privately by one of the companies owned by the tycoon. “It is one of the options on the table,” the agency quotes a source familiar with the proposed plan as saying.

DRB-Hicom's existing shareholders would be able to convert some of their shares into the newly listed company, the source says, and they also would be given cash payments of between one-half ringgit and MYR1 ($0.165 to $0.33) a share.

The auto-making arm would be relisted later in another form under the DRB-VW joint venture.

DRB-Hicom and VW signed a memorandum of understanding in 2010 to collaborate on the assembly and production of VW vehicles in Malaysia.

Meantime, Proton Executive Chairman Khamil Jamil says the auto maker aims to return its Lotus sports car unit to profitability within two years. Lotus, bought by Proton 17 years ago, has been losing money for the past 15 years.

The Business Times quotes Khamil as saying Proton is instilling a new management culture and rationalizing its 140 Lotus showrooms worldwide.

“We are going all out to revive Lotus, such as (by) enhancing standards and revitalizing the brand in an increasingly competitive market,” he says. “It's not easy, but the management will come up with innovative and forthcoming measures to make Lotus sustainable.”

Khamil says Lotus' future looks bright as the British marque has 20 units on order in Malaysia and has delivered 12 of them.