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Report: China auto giant quits Proton bid amidst profit surge
Published:  Mar 23, 2017 8:51 AM
Updated: 9:21 AM

Chinese car manufacturer Zhejiang Geely Holding Group Co has decided to quit plans to acquire a stake in Proton Holding and become its partner.

According to South China Morning Post (SCMP) yesterday, Geely president An Conghui confirmed abandoning the bidding at a time when the company has made its highest profits in nine years.

Geely, the owner of the Swedish Volvo brand, earlier on Wednesday reported better-than-expected earnings for 2016, as net profit surged by 126 percent to 5.1 billion yuan (RM3.28 billion), said SCMP.

However, An did not explain the reasons for pulling out of the Proton bid.

Earlier this month, Geely's billionaire founder and chairperson Li Shufu was reported criticising DRB-Hicom, the owner of Proton, for repeatedly changing its plans.

"They keep changing, today it's this, tomorrow it's that.

"They haven't decided what they want," Li was quoted as saying in a Bloomberg report.

Geely was speculated as being one of two bidders seeking to acquire a majority stake in DRB-Hicom.

Europe’s second-largest carmaker Groupe PSA, which owns the Citroen, Peugeot, and DS brands, is also in the running.

Inroads into SEA market

SCMP reported the successful bidder will get access to Proton’s Tanjung Malim assembly plant and give the company access to ship vehicles tax-free anywhere among Asean.

This, said the Hong Kong daily, was advantageous to Geely whose "main ambition is to expand its footprint into Southeast Asia", according to Hong Kong-based auto analyst at Sanford C Bernstein, Robin Zhu.

According to SCMP, Proton has been "struggling with losing market share in Malaysia while failing to compete overseas".

Meanwhile, Geely’s revenue jumped 78 percent to 53.7 billion yuan (RM34.54 billion) as the group sold 765,970 vehicles in 2016, up 50.2 percent from the previous year.

Of these, 744,191 units were sold domestically, up 53.6 percent from 2015, according to the company’s filing to Hong Kong Exchanges and Clearing, reported SCMP.

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