PROTON to solely focus on automotive segment

by IZZAT RATNA

PROTON Holdings Bhd’s RM1.2 billion non-automotive assets are expected to be transferred to its parent company DRB-HICOM Bhd to solely focus on the automotive segment, following the recent definitive agreement signing with China’s Zhejiang Geely Holding Group (ZGH).

DRB-Hicom signed the agreement with ZGH on June 23, 2017 to facilitate the China-based firm to take 49.9% stake in the national carmaker’s equity for RM493 million.

On the same day, DRB-HICOM also sold its entre stake in Lotus Advance Technology Bhd to ZGH and Etika Automotive Sdn Bhd for approximately RM479 million, of which ZGH will own 51% stake in Lotus.

DRB-HICOM’s group MD Datuk Seri Syed Faisal Albar said that the group is to entrust the government with the non-automotive assets as a collateral for the RM1.5 billion soft-loan given to PROTON back in 2010.

“The government is allowed to absorb the RM1.2 billion worth of assets should PROTON fail to repay the remaining soft loan value of about RM1.2 billion, which is scheduled to be fully settled by 2031.

“DRB-HICOM will still maintain full rights on PROTON’s non-automotive assets and will remain to manage them accordingly,” he said, adding that PROTON has paid about RM300 million of the total loan sum to-date.

Syed Faisal said the bulk of the capital expenditure (CAPEX) to boost PROTON’s market share and year-on-year (YoY) car sales both in Malaysia and in the ASEAN market would be allocated in the production, operation, as well as the manufacturing side.

“However, the exact amount on the CAPEX is yet to be identified as it ultimately depends on the future of PROTON’s long-term product planning for the brand to either be in the A,B, or C segment.

“We can come out with the exact amount in our CAPEX for the immediate and long-term prospects, only when a deep discussion on our clear goals takes place,” he told reporters at DRB-HICOM and ZGH signing ceremony in Kuala Lumpur.

Syed Faisal said that the main focus following the signing ceremony is to put both entities’ mind together to develop a business plan for the brand’s sustainability in the industry at large.

“We are still discussing with our new strategic partner and no concrete plans have been finalised yet…

“We will make the necessary announcement once we have more to present and details on the expansion are agreed between DRB-HICOM as well as ZGH,” he added.

The signing was witnessed and officiated by Prime Minister Datuk Seri Mohd Najib Abdul Razak along with senior management members of DRB-HICOM and ZGH.

Najib said that the newly forged partnership would expand PROTON’s footprint across ASEAN, which accounts to 3.2 million annual car sales.

“We also hope to increase PROTON’s market share in the Malaysia and total unit sales YoY of 12% and 72,000 in 2016 respectively,” he added.

Syed Faisal said that the signing was a historic moment for PROTON, as the national carmaker moves to make inroads into the large ASEAN automotive market.

“PROTON’s status as a national car is secure with DRB-HICOM stils a majority shareholder.

“Now PROTON can focus their effort with ZGH to gain market share domestically and I am positive that we will able to impact the market positively, by coming out with products that meet market preferences in terms of design and quality,” he added.

ZGH chairman Li Shufu said that PROTON and Lotus would create synergies to position the group as a major player in the ASEAN market, which in turn will enhance the firm’s global position to achieve sales target of three million units by 2020.

“We have every reason to expect a shared and bright future based on the values of respect, adaptation, inclusion and integration,” he added.

ZGH first garnered attention in the automotive industry in 2010, when it acquired Sweden’s Volvo Cars recording approximately US$1.2 billion worth of operation profit in 2016, which is the highest since its formation in 1927.

Ends

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