Foreign stratetic partner for Proton to be selected by first half

PETALING JAYA: DRB-Hicom Bhd aims to complete the selection of a foreign partner for automotive arm Proton Holdings Bhd by the first half of this year.

In a statement yesterday, the group said it is waiting for the submission of bids from potential foreign strategic partners.

“As we have stated previously, the parties have conducted their own due diligence on Proton over the past weeks. DRB-Hicom is now waiting for the submission of bids from the parties, after which an earnest evaluation of the bids will commence,” said DRB-Hicom group managing director Datuk Seri Syed Faisal Albar.

It was reported that Chinese automaker Geely Automobile Holdings Ltd is the front runner, ahead of French carmakers PSA Group and Renault SA.

Proton has been a drag for DRB-Hicom since the acquisition of the car maker in 2012. DRB-Hicom incurred a widened net loss of RM478.94 million for six months ended Sept 30, 2016.

In its search for the right foreign strategic partner for Proton, DRB-Hicom said it will evaluate three key criteria – strategic, operational and cultural fit.

A strategic fit will enable both parties to derive tangible benefits from the range of technology and products available, complementing each other’s needs in their own markets, and achieving economies of scale.

“In evaluating the potential partners, DRB-Hicom will insist that the Proton badge and its technology will be expanded into Asean markets first and global arena subsequently,” Syed Faisal said.

An operational fit will ensure that both parties complement each other’s strengths and existing company structures blend well to achieve seamless operation while a cultural fit would ensure a successful union.

As part of the evaluation, he said, the group will also assess the intention of the potential partners in utilising the current “home-grown” vendor network.

“This is a very significant element in our evaluation, as DRB-Hicom who also own subsidiaries serving Proton as vendors, would avoid for these ‘home-grown’ network to be diluted substantially,” he explained.

Syed Faisal said the partnership would also benefit the foreign partner, as it would be able to offer Proton’s range of affordable cars namely Persona, Saga, Preve and Iriz to specific markets across the globe.

He said the foreign partner would also be able to immediately increase their production capacity via Proton’s Tanjung Malim plant in Proton City, which has a low utilisation rate presently.

Syed Faisal stressed that the search for a foreign partner is a critical exercise to ensure the sustainability of Proton and is confident that Proton will enhance its brand equity with the right partner.

“We have stated before that we will maintain a significant equity in Proton, and this has not changed. The foreign strategic partner search is not about shirking our national responsibility but about enhancing Proton as a bona-fide carmaker, and eventually putting them, and Malaysia, on the global map,” he added.