In a turn of events, China’s Geely has agreed to buy a 49.9 percent stake in Malaysian manufacturer Proton.
Geely, which was in the lead to get the deal, abandoned the chase in April this year, leaving French automaker PSA – owner of Peugeot – in the running only to have a change of heart today.
The deal means Geely will now have a distribution network in Southeast Asia, where non-Japanese brands have struggled. Proton gets a financially strong partner and possibly more advanced technology.
The Chinese owner of Sweden’s Volvo Cars is expected to change Proton’s dwindling fortunes, due to growing competition and a reputation for poor quality and bland models.
Proton saw its market share dwindling to 12 percent last year.
According to AP, As part of the deal, Geely Holding Group Co. Ltd. will acquire 51 percent of British automaker Lotus from Proton for 51 million pounds ($66.2 million), officials said.
Proton is selling its stake in Lotus to cut losses.
The remaining 49 percent is being purchased by Etika Automobile, which is owned by Syed Mokhtar Al-Bukhary, the tycoon who holds the controlling stake in Proton’s parent company, DRB-Hicom, said DRB group managing director Syed Faisal Albar.
Geely executive vice president Daniel Li Donghui said his company plans to “restore Proton to its former glory with the support of Geely’s innovative technology and management resources,” said Li.
“Reflecting our experience accumulated through Volvo Car’s revitalization, we also aim to unleash the full potential of Lotus cars.”
He said Geely’s target is for Proton to produce 500,000 cars by 2020 for the Southeast Asian markets.
DRB-Hicom’s controlling 50.1 percent stake means Proton will remain a Malaysian national brad, officials said, AP reported.