Malaysia’s DRB-Hicom has begun a review of Proton’s operations and strategy after it acquired the Malaysian government’s 42.7% stake in the national carmaker. The company is also expected to acquire other minority holdings in Proton to consolidate its control.
DRB-Hicom, which assembles and distributes vehicles in Malaysia for Isuzu, Suzuki, Honda and, more recently, Volkswagen, wants to develop a strategic partnership between Proton and a foreign vehicle manufacturer to help strengthen the company’s global footprint.
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DRB-Hicom group managing director Datuk Seri Mohd Khamil Jamil told local reporters that “for Proton to move forward in the long term, it would need to be a widely recognised brand across the ASEAN and beyond”.
He also wants to maintain Proton’s national car status, which has underpinned the company’s domestic market strength since its inception in the mid-1980s.
DRB-Hicom’s chief operating officer Datuk Lukman Ibrahim believes that a stronger Proton would also translate into a stronger Malaysian automotive industry. He said his company was looking to improve efficiency and quality within the country’s component supply industry, as well as within the combined dealer networks.
Proton’s strategic partner will likely be Volkswagen, after DRB-Hicom began assembling its passenger cars in November last year. Volkswagen has yet to formulate a coherent strategy for the ASEAN region, where its market share and investment to date is minimal.
With Proton now in private hands, Volkswagen is expected to renew its interest in a strategic alliance with the national car company possibly under terms previously unavailable under government ownership.
Proton has substantial unused capacity in Malaysia, at its Tanjung Malim plant, which could potentially be put to use by Volkswagen to supply the ASEAN market.
It remains to be seen whether the UK sports car and engineering company, Lotus Group, will remain a part of Proton after the strategic review. It may be of greater interest to Volkswagen itself, however.
