SOME people do have selective memory. When he was the chairman of Proton, Tun Dr Mahathir Mohamad travelled to China to meet Chinese carmaker Zhejiang Geely Holding Group to seek a partnership with Proton.
And last week, the former premier made a big fuss over the loss of his so-called “child” following the sale of a 49.9 per cent stake in Proton to Geely.
It was Dr Mahathir and Tan Sri Syed Mokhtar Al-Bukhary, who owns the DRB-Hicom group that bought Proton in 2012, who went to China in 2014 to forge a Proton partnership with Geely. Their bid fell through.
Not unexpectedly, Dr Mahathir has reacted angrily to the news of the stake sale.
“I am a sissy. I cry even if Malaysians are dry-eyed. My child is lost. And soon my country. Please excuse me,” he wrote on Thursday.
With due respect, Sir, Proton is our child. But this child must learn to grow up and face the harsh realities of the global auto industry, where mergers and acquisitions are a norm.
Why cry, when we should instead rejoice that the future of Proton looks more secure than before.
The era of the over-protected domestic car industry and the over-dependency on the smallish domestic market is long gone.
Take the example of Volvo. Under Geely, the Swedish carmaker is back in profit and selling well in China and the United States.
Geely’s purchase of Volvo from Ford in 2010 was, at the time, one of the most high-profile takeovers by corporate China and it still serves as a test case for Beijing’s industrial ambitions as well as its financial power, UK’s Financial Times said.
Volvo’s business has rebounded after a series of bold moves in both Sweden and China, it said.
Its profit margins are currently within touching distance of those of the big three German brands — Audi, BMW and Mercedes, the UK paper said.
Last year, Volvo sold 82,000 cars in China, its biggest single market. This compares with its sale of about 70,000 in its home country Sweden.
Dr Mahathir may be sentimental about his “baby” but the stark business realities tell us that Proton has to have its economies of scale, better technology know-how and a deep pocket in order to survive.
There has been a spate of acquisitions worldwide, with Chinese and Indian automakers snapping established marques such as Volvo, Jaguar and Land Rover.
By the way, Jaguar and Land Rover are now owned by India’s Tata Motors.
Malaysians have long suffered from steep car prices due to the high import duties to protect Proton from foreign brands.
There has been a huge debate on whether the national car policy benefits or burdens the nation.
Little known to many, the Proton national car project was launched without much consultation, either outside or inside Malaysia.
It seems that while he was still Minister of Trade and Industry, Dr Mahathir contacted Mitsubishi, and reached an agreement with the Japanese carmaker.
Only a narrow circle of Malaysians was engaged in the negotiations.
Proton’s problems started almost as the company started its production. Over the years, it has changed hands many times.
The main challenge is how to sell enough cars to reach a viable scale of production. Its export market, however, is very limited, even almost negligible.
Previous attempts to produce an “Asean” car also failed. Two attempts to cooperate in producing a car with Indonesia also fell through.
In an interview with this paper today, DRB-Hicom group managing director Datuk Seri Syed Faisal Albar described Geely as the “best partner” for Proton, given its position as a global business group.
“Pound for pound, Geely was the best suitor,” he declared.
He said it took more than a year to close the deal. “We needed to find a partner that understood what we wanted and what we needed,” he said.
He said Proton now has a fair chance of making a strong comeback as a leading carmaker in Malaysia, as well as expanding overseas.
Proton, founded more than 30 years ago, is embarking on a new and more exciting journey with Geely opening up doors in China and elsewhere.
It has to finally make its mark as a global player, well supported by its shareholders, employees and vendors.
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