By Wang Fang
“Hi, Proton!” Greeted by Malaysian Prime Minister Mahathir Mohamad, Proton’s first SUV, the Proton X70, was released in Kuala Lumpur, Malaysia. It is the first model jointly developed by Geely Holding Group and Proton Holdings Berhad since they formed a partnership more than a year ago. “The launch of the Proton X70 is a key step on Proton’s path of recovery,” commented Mahathir, who endorsed Proton’s new model.
Proton was founded in 1983 by Mahathir Mohamad, who was then the prime minister of Malaysia, as part of the National Car Project with a goal of strengthening Malaysia’s car industry.
Proton cars were once very popular with Malaysians for their high quality and competitive price. In 2001, Proton sold more than 200,000 cars, with a domestic market share of 53 percent. However, after the entry of Japanese cars into the same market and due to limitations in R&D capabilities, Proton started rolling downhill. In 2016, it sold only 70,000 cars, with domestic market share of 12 percent.
In 2014, Proton began to search for cooperation partners around the world. After twists and turns, it finally decided to join forces with Geely. Considering the number of car manufacturers in the world, what made Proton choose Geely? Dato Sri Syed, Proton’s former CEO, explained that Geely was poised to help Proton with smart electric vehicle (EV) technologies. The partnership with Geely is also expected to help Proton better sustain the competition in the global auto market.
In June 2017, Geely signed a cooperation agreement with Malaysian conglomerate DRB Hicom Berhad to acquire the latter’s 49.9 percent stake in Proton and 51 percent of Proton’s stake in the luxury sports car brand Lotus.
“Our top priority is to make Proton and Lotus profitable as soon as possible,” declared Geely Chairman Li Shufu at the signing ceremony. “We will lay a solid foundation for their long-term sustainable development.”
According to Proton’s Ten-Year Business Plan, it aims to become the top car manufacturer in Malaysia and one of the top three in the ASEAN region. Meanwhile, through the deal, Geely will be able to tap ASEAN’s 600-million-consumer market and further expand its global presence.
Geely’s Technology Transfer
The first step to recovery for Proton was Geely’s commitment to transfer design and technology of the Boyue SUV (Geely’s best-selling model in China). Geely is the first Chinese car manufacturer to venture into the international market through this cooperation model. “Geely chose to introduce a relatively mature model from the Chinese market to Malaysia with an eye on improving the situation in the local market as soon as possible,” commented Li Chunrong, chief executive officer of Proton.
Boyue is Geely’s first model with access to its indigenous smart connection technology. Since its launch in 2016, sales have been outstanding. According to Geely’s official statistics, 630,000 Boyue SUVs have been sold so far, with a monthly average of more than 20,000.
During his visit to Geely headquarters in August 2018, Prime Minister Mahathir was impressed by Boyue’s AI voice recognition system that controls windows and sunroof, air-conditioning, widescreen and touchscreen infotainment and navigation system. “You can talk to the system in simple Malay,” said Mahathir, “I’m sure Malaysians will soon embrace this model.”
Based on the Boyue, Proton and Geely jointly developed Proton X70 to suit local conditions. “The Proton X70 has been repeatedly tested over a long period of time in Malaysia to ensure that the new model operates safely, reliably and efficiently in a variety of road conditions and traffic scenarios,” announced Li Chunrong at the 2019 Malaysia Economic Forum. “From 2018 to 2023, we will introduce one of Geely’s latest models to Malaysia every year and hone the car for both the local and international markets.”
After more than a year of cooperation, Proton’s R&D capabilities, product quality and market competitiveness have improved continuously. Its sales grew each month of 2018, reaching a 30-month high in July. It should be noted that the Proton X70 has excelled in the Malaysian market. Proton’s official statistics show that 2,777 were sold in January 2019, up 33.6 percent over December 2018.
“Through the export of technology and products, Geely will comprehensively upgrade Proton’s local innovation abilities, spare parts supporting system and employees’ professional skills to accelerate the transformation and upgrade of the brand and increase its share in the international market,” commented Li Shufu.
Proton’s ‘China Dream’
Proton has long aspired to enter the Chinese market. Its cooperation with Geely in new energy will help it realize its “China Dream.”
On August 18, 2018, Geely and Proton signed a framework agreement on strengthening cooperation in new energy, according to which the two sides will establish a new energy joint venture, each holding 50 percent of the shares (tentatively). That means Proton will enter the huge Chinese market with new energy EVs. The joint venture will build a factory in China to assemble new cars and develop a distribution system for the Chinese market and to compete in the global auto market.
As the founder of Proton, Mahathir has a strong connection to it. He attended the signing ceremony and announced that his government would actively support Proton’s cooperation with Geely. A dozen of years ago, Proton attended the Beijing Auto Show to look for opportunities to enter the Chinese market. Its cooperation with Geely in new energy is likely to finally realize this dream very soon.
New energy vehicles have already become consensus in the global auto industry. Against the backdrop of China’s vigorous development of new energy vehicles, Geely is striving to be a global leader in new energy technologies. In 2015, Geely announced the Blue Geely Action Plan for the development of new energy vehicles, which “aims to expand its EV sales to 90 percent of its new car sales by 2020.”
“I believe that Geely’s advanced technology, continuous innovation capabilities and successful transformation experience will create a brand-new atmosphere for Proton as well as Malaysia’s auto industry,” beamed Mahathir.