Proton to Set Up Factory with Geely in China

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Penetration of Chinese market, better Proton cars.

Proton Holdings has signed a deal with Zhejiang Geely Holding Group (Geely) to set up a manufacturing plant in China.

The facility will be a joint venture between the two carmakers with both companies taking up equal equity.

“The portfolio of cars for China will primarily come from existing Geely platforms, although the external design of the vehicles will be undertaken by Proton.

“The agreement also provides for existing Proton platforms that are found suitable to be developed into models for the Chinese market,” said DRB-Hicom Group managing director Datuk Seri Syed Faisal Albar during the signing ceremony in Geely headquarters here on Aug 18.

The event was witnessed by Dr Mahathir Mohamad, who is currently on his official visit to China.

The pact inked by the two companies today paves the way for Proton to assemble and market its cars in China.

Both parties aim to incorporate the joint venture within the first half of 2019.

Geely – the leading player in the local China market – is the first privately-owned Chinese carmaker to sell over one million units domestically in a calendar year.

Syed Faisal pointed out that Geely’s entry as a strategic partner to Proton via a 49.9% stake has paved an easier route for the Malaysian national car’s entry into the lucrative Chinese market.

Dr Mahathir acknowledged that Proton had been trying to get into the Chinese market for quite some time.

“But we produce right-hand drive cars that are not acceptable in China, so we need to produce left-hand drive cars, preferably in China because the cost here seems to be lower than in Malaysia.

“Besides, I think that we need quality cars and those that will be produced by Proton together with Geely will be of a better quality than what we presently have in Malaysia,” the prime minister said.

In order to take Proton beyond Malaysia, Zhejiang said in a statement on Saturday (Aug 18) that it will allow Proton to tap its green car technology, as well as basic vehicle platform technologies which Geely has developed jointly with its wholly-owned unit Volvo Cars of Sweden.

Using Geely’s technology, the Malaysian firm wants to make and sell upgraded Proton cars in international markets, starting with China but also in other markets such as Indonesia, other South-East Asian countries, as well as global markets, according to a person familiar with the matter, reported Reuters.

Geely’s investment is intended to help Proton grow its sales overseas and recover some of the global presence it has lost in recent years.

By offering some of its own technology, Geely has hopes it can also lift Proton sales in right-hand-drive markets, including Britain, India and Australia.

Dr Mahathir was also hopeful that the engineering knowledge to be gained from the Proton-Geely partnership would help Malaysia improve its cars.

Bernama

“We believe that if we obtain a new engine and improve the quality of the cars, we would be able to market and compete with other brands as well. Working with Geely would accelerate the process of bringing improvements to Proton cars,” Dr Mahathir said.

To a question, he said that based on what he had seen, Geely is capable of producing electric cars together with Proton for the ASEAN market and beyond.

Lotus and Volvo are among other marques in Geely’s stable. The company also holds a substantial stake in Daimler, which produces Mercedes-Benz.

During the tour of the Geely headquarters, Dr Mahathir test-drove three vehicles, including an electric car.

Later, he took a high-speed train from this city to Shanghai, a journey of about 150 km, before taking a flight to Beijing to continue with the second leg of his visit.