What’s Next for Proton-Geely?

Now that it has been confirmed that Proton and Geely will “tie the knot”, what can we expect from this “almost equal” union? Here are our predictions:

1) Short-term restructuring and acclimation pain

As with any new partnership, there will be an initial period rife with challenges, as some restructuring to the company is likely to occur. It was agreed that Geely would introduce its expertise as well as its top talents into the manufacturing side of the business. The Hangzhou-based Geely is an established global business player and has a proven track record in turning an ailing car company around (namely, Volvo), but there will be local sensitivities that it might not be attuned to; so it will be up to the (likely new) management to manage both local and foreign components in the company now that it will be 50.1% Malaysian- and 49.9% Chinese-owned.

2) A national car brand no more

Even though the majority shareholding of Proton will remain Malaysian, it might lose the identity of national car brand, of which it proudly assumed since the eighties. Or, at least, a national car brand will no longer be relevant (Malaysians, do you really care? Let us know in the comments section).

In recent years, we have seen iconic so-called national car brands – with identities that are closely related to the countries they hail from – pass into foreign hands. India’s iconic Ambassador, for instance, was sold to French Peugeot, just last February; the British Jaguar Land Rover became a wholly owned subsidiary of India’s TATA Motors since 2008, and has been more than thriving since.

3) Growth and investment, and finally profitability, for Proton

DRB-Hicom said it would receive RM170 million cash from Geely as well as the rights to build and sell Geely’s Boyue SUV (pictured below) in South East Asia, a project estimated to be worth some RM600 million.

When Geely took over Volvo and the London Taxi Company, it made huge investments to upgrade and update the two company’s car production. The results speak volumes about Geely’s commitment and business savvy: Volvo’s sales grew by 6% in 2016, a record high in the company’s history, and the Swedish-born automaker finally got out of the red and made a remarkable RM1.5 billion profit in its last financial year.

4) Geely gets a foot (or rather, wheel) into SEA

So, the Boyue SUV, a C-segment vehicles, is one of Geely’s best-sellers, launched just March last year. Having the rights to sell Geely cars in the SEA region – from rebadging and manufacturing to distributing – could generate more cash for Proton that could in turn be channelled into development of new models in the future.

That said, Chinese marques have not been popular in our neck of the woods. The best-selling Chinese brand, Chery, only managed 491 units in 2016. Proton will have to manage quality perception issues to increase market acceptance…However, that has always been the problem that Proton has with its own cars, hasn’t it? Geely does have Volvo’s R&D and technology backing it, which can also be used to Proton’s technical advantage and perhaps a branding boost.

Let’s hope for a bright light at the end of the tunnel for Proton; there’s potential for it to become the pride of the nation yet again.

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