The Malaysian business conglomerate DRB-Hicom has finally found a foreign firm to help restore Proton to its former glory
Chinese automakers Zhejiang Geely Holding Group have bought a 49.9% stake in Malaysian carmaker Proton, seen by many as the darling of the country’s post-independence economic development.
After recording losses of $200m in the financial year ending March 2016, the Malaysian business conglomerate DRB-Hicom set out to find a foreign strategic partner for its struggling car subsidiary.
It was a move welcomed by Malaysian Prime Minister Najib Razak, who approved a government loan of $364m to the carmakers last April on the condition that they made good on their promise to bring in a foreign partner.
Proton’s performance has long been a point of political tension between Najib and former prime minister Mahathir Mohamad, with the former often pointing to the carmaker’s woes as evidence of the latter’s mishandling of the economy.
“There has been too much political interference in Proton’s strategy, management – including of personnel – and business model,” Najib said at the launch of a new Proton car model in June 2016. “We saw the results of that early this year. A manufacturer which should be a source of national pride was facing a very difficult situation.”
The carmaker, upon which Mohamad – who resigned from his role as chairman of Proton Holdings last March – centred his industrialisation drive during the 1980s, has long been in decline. Unable to compete with the influx of foreign cars, Proton’s domestic market share fell from a peak of 74% in 1993 to 15% in 2017.
But Malaysia’s second finance minister Johari Abdul Ghani was optimistic that Zhejiang Geely Holding Group would spark a wave of research and development that would ensure the carmaker remained competitive in the years ahead.
“Proton will always remain a national car and a source of pride, as Proton will still have a majority hold of 50.1 percent,” he said at a press conference announcing the recent deal, according to Reuters.
“Our very own much-loved brand now has a real chance in making a comeback, a huge one I hope.”