Friday, May 26, 2017

EDITOR'S OPINION: The DRB-Hicom-Geely deal has been formalised - PROTON's Saga Continues as well as Lotus Cars too

Yes. PROTON's saga continues (pun intended) with the announcement that Geely will become its strategic partner. The super large China based vehicle manufacturer has become PROTON's savior. Most of you are aware and almost everyone I know has been talking about it. Almost everyone because my immediate family members don't really seem to care much. Well, you can't expect my mum, wife and thirteen year old kid become automotive industry experts do you?


So the sale has made headlines. 49.9% equity in PROTON Holdings will be sold to Geely Holdings and 51% of Lotus Cars will be sold to them too with the other 49% going to a Syed Mokhtar Al-Bukhary related company (who is the largest shareholder at over 55% stake in DRB-Hicom). So DRB-Hicom still controls PROTON, but lets go of Lotus. However, whilst Lotus does not belong to DRB-Hicom anymore, it is still in the hands of another Syed Mokthar company. It looks like he isn't too keen of letting go of Lotus fully as yet.

Most are also aware of Geely's hands-off approach to its investments in the automotive industry. It has controlling interest in Volvo Cars but it has actually let them develop on their own accord. Of course, the thing with Volvo is that the company is filled with innovation. The only problem they had was a cashflow issue to develop new cars and with money from Geely, the new batch of Volvo cars have appeared like the XC90 and S90 which have received favourable reviews. 

I suppose the win-win situation that DRB-Hicom and I believe some parties within the government of Malaysia, wanted PROTON to have a strategic partner that was willing to let PROTON grow on favourable terms (to PROTON's supporters). So with DRB-Hicom still holding that slight majority, this will happen. 

With PROTON building decent cars these days (it's actually true), Geely must have actually considered this fact and has allowed DRB-Hicom to retain ultimate control. But one can also tell that their main aim in all of this is the takeover of Lotus Cars. This is the actual coup for Geely. It's that brand prestige that they want. PROTON is just there and they can use the company to produce cars for the right hand drive market for this region which they do not have any notable presence at the moment. Maybe use the talents of PROTON to re-engineer all Geely cars into right-hand drive in the future as well as use Tanjung Malim as a manufacturing base for the region and the right hand drive market. It is possible.

Now in terms of Lotus Cars, I do wish Geely will not really do a Volvo and let the management of Lotus do as they like. Unlike Volvo, whilst now a premium to near premium manufacturer, Lotus is a niche player. Super niche in fact. Too niche as fat, chubby and even tall people would find entering and exiting a Lotus a life threatening experience.
 
Aside from the Evora, the only Lotus I can fit in without experiencing some psychological trauma, ranging from torn trousers (yes, an Exige S' door latch did that to me) to having to become a contortionist from the Beijing Acrobat troupe even though I actually have the muscular physique just shy of the great Sammo Hung. Someone needs to tell them to shove the 'Just Add Lightness' and add more space for fat people so that rich fat people can buy the car. Hey, not everyone is slim you know.

And whilst Geely is at it, I think they should bring back the Esprit too. No need to find another word starting with the letter 'E'. Their history books are filled with nice cars beginning with the letter 'E'. And I wouldn't want a Lotus to be called Erect, Erupt or Evil. Another Esprit, Elan or Europa would be fine. And then, bring back those rebadged, tuned and modified stuff like the Lotus Carlton, Lotus Cortina and Sunbeam Lotus. Those are great driver's cars too. Without all that 'Just Add Lightness' hoohaa.


Now as for Proton, the first step most of us will see would be the rebranding of a Geely SUV like the Boyue SUV pictured above - One look at this and you see Land Rover/Range Rover styling with a inconspicuous nose and wheels that came from a Mercedes-Benz C-Class. But it would make a great PROTON SUV with just some simple cosmetic re-trim here and there. 

And the quicker the SUV arrives the better. The reason is that if you look at the current PROTON line-up, such a vehicle is sorely missing especially when most industry players note that the SUV market is one of the fastest growing segments today. Aside from this, the only other improvement would be internal. Geely would know how to make production more efficient and most importantly, with a foreign partner, more control on resources, raw material and then build quality. This has been a problem with PROTON ever since I can remember.

Of course, nothing is set in stone yet actually. Things will only be firmed up in July 2017. A lot of things can happen till then and at the actual management and manufacturing arrangements which have not been finalised as yet. I do not really like speculating as everyone can and is doing this. 

We have only touched first base in this latest round of PROTON's ongoing saga. Pun intended again. I am just waiting for July actually. We shall actually see what's going to happen after that. Before that, I believe business is as usual. Especially since the fasting month and the Hari Raya celebrations being just around the corner.

Then, come July I will start making some popcorn. 

PRESS RELEASE
DRB-HICOM, GEELY, REACH ACCORD
Posted on May 24, 2017


PUTRAJAYA, 24 May 2017: DRB-HICOM Berhad (DRB-HICOM) has reached an agreement with China-based Zhejiang Geely Holding Group Co.,Ltd (GeelyHolding) for the Chinese car group to acquire 49.9% equity in PROTON Holdings Berhad. DRB-HICOM currently owns 100% of the manufacturer of the first national car. The two parties signed the agreement in Putrajaya today, witnessed by YB Datuk Seri Johari Abdul Ghani, the Minister of Finance II.

The deal will enable PROTON to tap into Geely Holding’s vast range of platforms and power trains, and will also enable PROTON to have access to existing markets of the Chinese carmaker, as well as right-hand drive markets in south-east Asia.

DRB-HICOM Group Managing Director, Dato’ Sri Syed Faisal Albar says the PROTON brand will remain present and will grow significantly with the new foreign strategic partner on board.

“Our intention was always to ensure the revitalization of the PROTON nameplate. It was Malaysia’s first national car brand and has more than 30 years of history. This deal will be the catalyst to elevate a brand that Malaysians resonate with,” said Syed Faisal.

The deal will also see PROTON sell its entire equity in British carmaker Lotus, which will see the Group exit the sports car segment.

Geely Holdings, which also owns Volvo Car Corporation and The London Taxi Company, is one of the leading passenger vehicle carmakers in China. It already has facilities across the globe, including 16 manufacturing plants, 7 design studios and 5 research & development centres.

The deal with PROTON will offer Geely access into the key ASEAN market, and also R&D and manufacturing presence in the region.

Both parties expect to sign the Definitive Agreement in July 2017.

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