Proton has signed a heads of agreement with Geely as a step towards the assembly and sale of Proton cars in China. Both parties will enter into an equal-share joint venture for this purpose, which will be announced in due course.
The agreement entails new models which will be developed with Geely from this point onward, and will focus on electrification technology. Geely already has said technology in its portfolio and has several models on sale thus equipped, including the Geely Bo Rui GE plug-in hybrid (PHEV) and mild hybrid models (MHEV) for the Chinese market. The PHEV combo is similar to Volvo’s T5 Twin Engine powertrain.
Also specified in the agreement is Geely’s role in providing the vehicle platform, and engineering aspects such as engines and drivetrain for the models involved; while Proton will bear the task of exterior and overall design for the new models involved.
It is understood that these upcoming models will be sold in the China market with Proton branding, while Proton’s existing platforms are also under consideration for the development of further China market models, should the platforms be deemed suitable.
This latest development was announced at a function at Geely’s headquarters in Hangzhou, which was attended by Malaysian prime minister Tun Dr Mahathir Mohamad, Zhejiang Geely Holding Group chairman Li Shufu, minister of international trade and industry Darell Leiking, minister of primary industries Teresa Kok and Perak chief minister Ahmad Faizal Azumu.
This move also demonstrates Geely’s commitment to explore further cooperation with Proton to further strengthen the latter’s position and widen its reach for the export market. Previously, Proton had made an attempt to enter China via joint ventures with Youngman and Goldstar, though it was an effort which failed to bear fruit.
“Clearly with Geely on board, Proton’s route into China has become more tenable. Part of Geely’s role is to secure the manufacturing licenses and regulatory approvals required for such a venture under China’s regulations. Geely will also identify a suitable location where the manufacturing facility is to be based,” said DRB-Hicom MD Datuk Seri Syed Faisal Albar.
Proton’s current vendors who are competitive and meet the required standards will be considered as suppliers for the upcoming joint venture, Syed Faisal added. This is in line with the Malaysian government’s desire to open up opportunities for local vendors to be a part of China’s greater supply chain.
“In line with the prime minister’s deep expectations, we have decided to deepen our strategic cooperation between our two sides in the field of new energy, increase our investment in architectures, product platforms, as well as core component investment in Malaysia, which will help both nations occupy the commanding heights of future development in the automotive industry, said Geely chairman Li Shufu.
Speaking at the press conference after the signing ceremony, Tun M said that he hopes the collaboration will enhance the engineering capabilities and knowledge of Proton. “I have to admit, there have been much improved quality and technology shown by Geely through its new models,” said the PM, who last visited Geely’s Hangzhou HQ four years ago.
It would be a considerable achievement for Proton to penetrate the Chinese market even with a small percentage of market share to begin with, as the company aims to increase production and expand its export markets. It will be a vast field to harvest from; the passenger car market in China has been growing at a considerable rate over the last 10 years, and it’s now the world’s biggest auto market.
For scale, 6.76 million passenger vehicles were sold in China in 2008, a figure which has grown to 24 million vehicles in 2017. Geely has taken its place at the sharp end of the Chinese market – which has approximately 300 automakers – by becoming the first privately-owned Chinese brand (as opposed to government linked) in China to reach the one million vehicles sales mark last year.
More precisely, Geely sold 1.24 million vehicles in 2017 for a market share of 5.06%. The company has sold 125,000 vehicles monthly on average in the first six months of this year. The Geely Boyue, which is the basis for Proton’s first SUV that will be launching in Malaysia later this year, has charted sales of 20,000 units a month in China this year.
“The car that I like to drive the most in Malaysia is the Volkswagen Tiguan – the ease of driving and comfort is very good. When I drove the Geely Boyue, I found that the quality is approximately the same. So there has been tremendous improvement in the cars produced by China and Geely,” said Mahathir, when asked about his experience testing the Boyue. The PM has been spotted driving a previous-generation brown VW Tiguan in Langkawi.
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