AMID TALK OF CHINA’S GEELY GETTING THE DEAL, DRB-HICOM SAYS PROTON’s FOREIGN PARTNER TO BE NAMED BY JUNE 2017

KUALA LUMPUR: DRB-Hicom Bhd expects to pick the foreign strategic partner (FSP) for Proton Holdings by the first half of 2017, if not earlier, once the bids and evaluation have been completed.

It said on Tuesday that it was awaiting bids from the potential partners for Proton Holdings following the completion of their own due diligence on the national car manufacturer 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.

“Also as stated previously, we aim to complete the selection by the first half of this year, although we strive to conclude it earlier and this remains the target for DRB-Hicom,” it said.

DRB-Hicom stated a FSP for Proton was critical to ensure the sustainability of the national carmaker.

It also said its stance about maintaining a significant equity in Proton has not changed.

“The FSP 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.

DRB-Hicom would 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,” it said.

Below is the statement issued by DRB-Hicom

SHAH ALAM, 7 February 2017: DRB-HICOM Berhad (DRB-HICOM), as 100% owner of PROTON Holdings (PROTON), believes that PROTON can be a more successful carmaker once a foreign strategic partner (FSP) is on-board.

The entry of a FSP will enable PROTON to revitalize itself through access to new platforms, powertrains and technologies which will further improve PROTON’s range of products and its quality.

This revitalization of PROTON’s market share underlines DRB-HICOM’s intent to keep the brand as a player in the automotive market. PROTON has been in the market since the mid-1980s, and it has some brand equity in the domestic market, despite past and current challenges.

DRB-HICOM remains committed to revive PROTON’s fortunes, and finding the right FSP is critical to that goal. History has shown that collaborations between a smaller carmaker and a larger carmaker can revive the former’s fortunes. DRB-HICOM is confident that with the right FSP, PROTON will enhance its brand equity can again be a successful carmaker as it was in the 1980s and 1990s.

THE RIGHT FIT FOR PROTON

In finding the right FSP for PROTON, DRB-HICOM will evaluate three key criteria, which are strategic, operational and cultural fit.

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

This strategic fit will also ensure that PROTON can achieve economies of scale from its domestic operations. 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.

An operational fit with the FSP ensures that both PROTON and the partner will complement each other’s strengths.
The structures that exist within each company must be able to blend well so as to achieve seamless operation at PROTON and the partner themselves.

As in any collaboration, a cultural fit will ensure a successful union. This “chemistry” between the two parties will be critical in pushing PROTON forward while enhancing the FSP’s own operations vis-à-vis their short and long-term plans.

These criteria are aimed at ensuring that both parties will be able to achieve each other’s strategic targets as quickly as possible and with minimum interruptions to business operations.

With a close fit that matches the items listed, DRB-HICOM is confident the venture will be beneficial to all parties.

PROTON WILL BENEFIT THE FSP TOO

Contrary to common belief, PROTON too has plenty to offer to the eventual FSP.

First, they will have at their disposal PROTON’s own range of affordable cars, such as Persona, Saga, Preve and Iriz.

These cars are manufactured to high production standards and meet global safety standards. Any carmaker that is on board with PROTON will be able to find a range of cars to offer specific markets across the globe.

Secondly, one of the immediate advantages available to any carmaker partnering with PROTON is the ability to immediately increase their production capacity through PROTON’s Tanjung Malim Plant in PROTON City.

The plant has a low utilization rate presently, and optimising the use of the modern facility will also benefit the local workforce. This means Malaysians can benefit from increased employment opportunities with full capacity utilisation at the plant.

Finally, PROTON has its own in-house research and development team, as well as the lightweight platform technology of Lotus Cars UK. The combined engineering capabilities of PROTON and the legendary Lotus Cars offers a FSP enhancements to their current capabilities, which will enable them to enhance their existing R&D capabilities.

PROTON IS A NATIONAL CARMAKER

It is important to point out that DRB-HICOM’s search for a FSP for PROTON is a critical exercise to ensure the sustainability of the national carmaker.

As a local company, DRB-HICOM is proud to be the owner of the first national and ASEAN’s only car manufacturer.

We have stated before that we will maintain a significant equity in PROTON, and this has not changed. The FSP 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.

As a responsible shareholder, as part of the evaluation, DRB-HICOM shall also assess the intention of the potential partners in utilizing 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.

STATUS OF SEARCH

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.

Also as stated previously, we aim to complete the selection by the first half of this year, although we strive to conclude it earlier and this remains the target for DRB-HICOM.

– ANN

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