DRB-Hicom appears to have run out of patience with Proton, which has been a big drag on its profitability

DRB-Hicom appears to have run out of patience with Proton, which has been a big drag on its profitability

DRB-Hicom, the parent company of Proton Holdings, is preparing to sell a 51% stake in Malaysia's first national car company to a foreign strategic investor, according to local reports citing industry insiders.

DRB-Hicom took control of the company from the Malaysian government in 2012, but since then has failed reverse the sharp decline in the carmaker's sales.

Proton's domestic sales have declined by 37% to little more than 42,000 units in the first eight months of the year. Full-year global sales are expected to be in the region 70,000 units - their lowest level in more than 20 years.

The automaker has put significant pressure of DRB-Hicom group's financial performance, which has reported falling revenues and widening losses due mainly to Proton's poor operating performance.

Leaner automakers such as Daihatsu-affiliated Perodua - the country's second national car company, Honda and Toyota now control Malaysia's passenger vehicle market.

Earlier this year, the Malaysian government was forced to provide Proton with a MYR1.25bn (US$312m) financial bail-out on condition it found a reputable global strategic investor.

According to local reports, DRB-Hicom is currently considering proposals from a handful of automakers to invest in a majority stake in Proton, including Germany's Volkswagen group, Japan's Suzuki Motor and French automakers Peugeot and Renault.

DRB-Hicom expects to reduce the shortlist further by the end of October, after negotiations that are due take place next month.  It is sending executives to Japan next week to hold talks with Suzuki, followed by trips to France and Germany.

See also: Time is running out for Proton - Analysis

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