Time to press the pedal to the metal

By IZZAT RATNA & NG MIN SHEN / Pic By TMR

Better days are expected at the national car brand Proton. But returning to profitability and delivering instant results would be as complex as putting 30,000 parts in a car blindfolded.

After a tumultuous and costly last few years, Proton Holdings Bhd (PHB), the holding company for Perusahaan Otomobil Nasional Sdn Bhd (PONSB), expects to return to profitability in the next five years for its operation in Malaysia.

As PHB’s partner Zhejiang Geely Holding Group Co Ltd completed its 49.9% share deal with DRB -Hicom Bhd for RM460 million last week, the company aims to become the top three market leader in Asean.

Works though at the car company have intensified. PHB’s board received nominees from Geely. PONSB appointed auto- motive veteran Dr Li Chunrong as the new CEO. A 10-year plan is on the table which will chart the brand out of oblivion.

DRB-Hicom group MD Tan Sri Syed Faisal Albar Syed Ali Rethza Albar said the country’s once leading car brand said the cost of doing business would be critical for the company to succeed in the competitive automotive market.

He said the company will also maximise the local components in order to benefit from the country’s industrial incentives for car manufacturers.

Syed Faisal said the strategy would further boost the carmaker’s margins.

“A portion of Proton’s products will stay, which will also be mixed with new components from Geely.

“But I am unable to divulge the exact percentage difference as it involves many moving parts,” he said last Friday.

While the corporate exercise and share stakes have been completed, changes at the operational level including introduction of new models are more complex.

Syed Faisal said products from Geely or other international partners would take time to be introduced into Malaysia due to the high level of configuration needed to meet the country’s requirements.

He also said the level of programming, complex design development and market placement initiatives take approximately three to four years.

Li said the focus is to achieve the projected turnaround period, product planning, modification, procurement strategy and quality improvement in order to satisfy the market and consumers’ demand.

“Geely, being the new strategic partner of Proton, will provide all the necessary support in product manufacturing, coupled with talents and other resources in research and development,” he added.

Li said all stakeholders want to return the brand to its former glory as the No 1 domestic and a leading Asean brand, and his main task is to develop vehicles for Proton. The first would be a midsized SUV.

“To make this vision happen, Proton now has access to the global synergies, expertise and financial support it needs from the Geely family and I believe Proton’s best days are ahead of it,” he said.

“We will use our global resources and synergy to realise the true potential of Proton in partnership with DRB-Hicom,” Geely’s executive VP and CFO Daniel Li Dong Hui said.

DRB-Hicom’s divestment of 547.02 million shares, or a 49.9% stake in PHB, to Geely for RM460.3 million has been completed.

The company told Bursa Malaysia last Friday, Geely has nominated its fully owned subsidiary, Geely International (Hong Kong) Ltd, to receive and hold the shares in PHB.

With the completion of the deal, DRB-Hicom’s equity interest in PHB is now reduced to 50.1%, while the remaining 49.9% equity interest is now held by Geely International.

PHB has also completed the divestment of its 51% issued shares in Lotus Advance Technologies Sdn Bhd to Geely and the remaining 49% to Etika Automotive Sdn Bhd, in addition to the divestment of 51% preference shares in Lotus Cars Ltd to Geely and the remaining 49% to Etika Automotive, for £100 million (RM567 million).

Geely International will also hold its parent’s 51% stake in Lotus Advance Technologies, as nominated by Geely.