Zhejiang Geely Holding Group and Malaysian car manufacturer Proton Holdings Bhd announced a joint venture that will bring their cooperation in introducing new car models in China, as well as making electric cars and diversifying into the international market.
The name of the company has not been announced yet but Geely and Proton will own 50 percent stake respectively. The company will most likely be involved in car assembly, supply purchasing, and overall production. Other details with regard to market strategy, product lineup, and headquarter location remained unconfirmed as of press time.
A report from The Straits Times said the car's lineup for China would finally follow the portfolio of cars from existing Geely models. Proton will be assigned primarily with the external designs. The company's existing vendors will most likely be the priority when looking for car parts suppliers.
Reuters reported that Geely will allow Proton access to its green-car technology and basic car machinery that it developed with Volvo Cars of Sweden.
People familiar with the business deal told Reuters that launching new cars in China only comprised the first phase of the company's marketing plan. Through time, the company will penetrate the market in Indonesia and break through the right-hand drive market of Britain, India, and Australia. As the company adds more to its product lineup, Geely and Proton will continuously bring it upmarket.
For the initial stage, Volvo will be introduced as the company's premium brand, upgraded Geely cars as its mid-market brand, and updated Proton car models for the lower-cost entry brand. The first step, meanwhile, is for Proton to begin a feasibility study on how to successfully enter the Chinese market.
The joint venture between Geely and Proton was received with optimism by investors and analysts according to Xinhua.
Hong Leong Investment Bank believed that through the venture, Proton can reclaim its market leadership in Malaysia and can position itself once again as one of the top three original equipment manufacturers in Southeast Asia. The bank also saw the possibility of Proton and Geely being integral in Malaysian Prime Minister Mahathir Mohamad's vision of designating a new national car for Malaysia. The venture may also see both companies heading the production of the new Malay-Indonesia ASEAN cars.
RHB Research Institute highlighted that Proton will benefit greatly with the joint venture as it gives the car company an opportunity to ride the growth of China, the world's largest car market to date. The country has managed to double its car sales from 12 million units in 2011 to 24 million units in 2017. Geely sold 1.2 million units in 2017, holding as much as 5 percent of the market share.
Kenanga Research also thinks that the venture will work great in Proton's favor as it realized its ambition to penetrate the exports market through the venture.
