Group Managing Director DRB-HICOM Berhad Syed Faisal Albar (second left) and Executive Vice President and CFO Zhejiang Geely Holding Group Daniel Li (Li Donghui) shake hands as Malaysia's Minister of Finance II Johari Abdul Ghani (centre), witnessing the
Beijing: Chinese billionaire Li Shufu is buying Malaysia’s unprofitable national carmaker Proton Holdings Bhd pretty much for two reasons: access to 600 million consumers in Southeast Asia and the brand cachet of Lotus Cars.
Li’s Zhejiang Geely Holding Group, which also owns the upscale Sweden-based Volvo Cars, announced yesterday that it will buy 49.9 percent of Proton and a 51 percent stake in Lotus Cars. The two parties are still in talks about transaction price for the stake in Proton, Syed Faisal Albar, group managing director of DRB-Hicom Bhd, which is selling the stake, said.
By investing in the Malaysian auto group, Li is betting he’ll gain an inroad into Southeast Asia, a region with an expanding middle class that the Chinese government is also investing in as part of its “Belt and Road” infrastructure development initiative.
Lotus Cars could complete Li’s ambition to create a portfolio of international brands at different price points. For Geely, Lotus would be a prestigious addition, “like Volkswagen has Porsche and Toyota has its Lexus,” according to Tian Yongqiu, an independent auto consultant who tracks Chinese carmaker acquisitions. Under Proton, the British marque lacked the scale or investment needed to make it into a global sports brand, something that could change as part of a broader Volvo-Geely group.
“Geely has almost finished the puzzle for the global market: It has presence in Europe through Volvo, which can also go to the US. It must fill in the blank by breaking into Southeast Asia, which is dominated by Japanese small cars,” Tian said. “It’s hard for Geely to break into this market on its own. But with Proton’s factory and massive network, it can be a short cut.”
