Technical partners may seek 51% stake in Tanjung Malim plant

PETALING JAYA: Chinese car manufacturer Geely Automobile Holdings Ltd is said to be leading the race to become the technical partner of national car manufacturer Proton Holdings Bhd.

Also, it is learnt that the national car manufacturer has made some changes to the top executives of its operations in preparation for the entry of a new technical partner.

Towards this end, among the changes are said to involve chief technical officer Abdul Rashid Musa being slated to take over the group’s sales division, Proton Edar Sdn Bhd, to boost sales.

Abdul Rashid will replace Rohime Shafie, the former chief executive officer of Proton Edar, who has been reassigned to another subsidiary within Proton.

The new chief technical officer is said to be a person who was formerly with the United Kingdom’s Lotus Group. The changes took effect yesterday.

According to sources, PSA Group of France, the second-largest car manufacturer in Europe which produces marques such as Peugeot and Citroen, is also actively undertaking due diligence work at Proton’s headquarters.

“However, between the two, Geely appears to show more interest. Both are busy with their due diligence at the moment ... you can see both Geely and PSA officials at Proton’s headquarters almost everyday,” said sources.

It is learnt that both Geely and PSA want 51% in the manufacturing plant in Tanjung Malim. The government has given the green light for foreigners to own a majority stake in the assembly plant.

Malaysia Automotive Institute CEO Datuk Madani Sahari said Proton’s Tanjung Malim plant was a prized asset to gain access to the South-East Asian market.

“The Tanjung Malim plant is one of the best assets in Proton. Any new technical partner of Proton would have immediate access to produce cars with Proton, and it could be used as their Asean manufacturing hub,” he said.

“Aside from the manufacturing plant, Proton has been in the car market since the early 1980s. It understands the Asean taste,” he added.

On the changes in the key people of Proton’s operations, Madani feels that having Abdul Rashid to head the sales team could be part of Proton’s plan to boost its monthly sales target to 10,000 a month, and market the brand to be in line with the recent technological efforts by the firm.

“The carmaker has made a lot of technological changes to its cars, and Abdul Rashid is moved there probably to send out the message on its latest technology,” he said.

Last month, Proton CEO Datuk Ahmad Fuaad Kenali said the firm was expecting to announce its tie-up with a foreign strategic partner as early as April.

He had said that while Proton had the urgency to decide on its foreign tie-up, it was also careful in evaluating and deciding the best proposal.

Ahmad Fuaad had said that there were three short-listed companies that were in the midst of completing a due diligence process to finalise their proposal.

The requirement to collaborate with a well-known strategic partner was imposed upon Proton as part of the conditions issued by the government for its approval of an RM1.5bil soft loan to Proton, in which a bulk of the money would be used to pay its vendors.

Sources said that not all suppliers had been paid, especially the service providers.

“Only vendors for component suppliers have been settled so that they can continue supplying parts to Proton. Service providers have not been paid yet,” a source said.

Proton began the process of identifying its strategic partner in June 2016 by sending out a request for proposal to 14 original equipment manufacturers (OEMs).

Out of these 14 OEMs, three foreign parties have since been shortlisted. It is understood that the three parties are China’s Geely as well as French carmakers PSA Group and Renault SA.