Published: Sun, June 25, 2017
Hi-Tech | By Merle Christensen

Geely signs final contract with DRB-Hicom

Geely signs final contract with DRB-Hicom

DRB-Hicom group managing director Syed Faisal Albar said Geely will invest 170.3 million ringgit (S$55.1 million) cash and its SUV Boyue platform worth 290 million ringgit for the 49.9 per cent stake in Proton it agreed to buy in May.

He said Proton would relocate its Shah Alam operations to Tanjung Malim, adding that DRB-Hicom would undertake the construction of a test track facility and a R&D test track for Proton at the new location.

When attending the signing ceremony, Malaysian Prime Minister Najib Razk said Proton only sold 72,000 units in 2016, giving it barely 12 percent of the Malaysian market.

Li Shufu, chairman of Zhejiang Geely Holding Company, said: "As an iconic national brand, Proton epitomises the spirit of Malaysia". Geely, the Chinese owner of Sweden's Volvo Cars, will inject 170.3 million ringgit ($40 million) into Malaysia's Proton as part of its purchase of a stake in the automaker and is paying 51 million pounds ($65 million) for 51 percent of Proton-owned British sports vehicle maker Lotus, an executive of the Malaysian company said Friday.

DRB-HICOM will retain 50.1 percent stake in Proton. Proton will rebadge, manufacture, sell, market and distribute Geely models in Malaysia and Southeast Asia.

"When they have turned profitable and have sustainable development plans and products, then they can plan to export", Li said, when asked if Proton would export to China.

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Furthermore, it is expected that the experts of the British manufacturer of sports cars Lotus going into the configuration of the chassis of future models of Volvo.

"We will work together for the resurrection of Proton in Southeast Asia. we believe it won't be long before we achieve profitability", he said.

"With Zhejiang Geely making Proton its right-hand-drive hub for the Asean region, Proton can now target the huge Asean passenger auto market for both our models and Geely's".

Geely is the parent company of Volvo, where it has carried out a successful turnaround of the business since acquiring it in 2010.

"DRB-Hicom will also be repaying RM350 million of the government's RM1.5 billion soft loan due in 2023 in advance, to help with Proton's reorganisation", he said.

On the RM1.5 billion soft loan given by the government in June previous year, Syed Faisal said, the government was expected to release the balance of RM250 million as the company had met the conditions set by the government's special task force with the signing of Geely as its strategic partner.

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