The most exciting prospect for Proton Holdings Bhd moving forward lies in the rights it secured from its new foreign strategic partner to manufacture sport utility vehicles (SUVs), a car analyst said today.
The deal with China's Zhejiang Geely Holding Group Co Ltd (Geely) will enable Proton to produce an immediate result in refreshing its model line-up by adding a missing segment in its model range, said Hezeri Samsuri, who is the Careta Media managing editor.
The SUV is taking the international car market by storm and is the world's largest growing market segment.
DRB-Hicom Bhd, which fully owns Proton, and Geely are expected to sign the Definite Agreement to seal the deal tomorrow under which Geely will acquire a 49.9 percent stake in the national carmaker.
With it, Proton is given access to Geely's best-selling Boyue SUV and is expected to roll out its first SUV as early as the second half of 2018.
Proton will manufacture, sell, market and distribute the Boyue SUV under the Proton brand name in the South-East Asian market.
"Proton needs to reclaim its lost market share and this is no easy task given the fierce competition from foreign brands.
"And to manufacture its own SUV will be an impetus for Proton to enter into an entirely new segment," Hezeri said.
He said the Malaysian consumers were hungry for SUVs as could be seen by the resilient and high growth SUV sales this year amid declining passenger vehicle sales.
The Boyue, which was launched in March last year, was designed by former Volvo designer, Peter Horbury, who now heads Geely's design studios located in Gothenburg, Shanghai, Barcelona and Los Angeles.
Geely has some 300 designers from various backgrounds, reflecting its seriousness in grabbing a share of the global market.
Hezeri said leveraging on an already best-selling model would fast track Proton's growth coupled with reducing its massive research and development (R&D) expenditure apart from providing Proton the quality the Boyce is known for globally.
"As an Asean born car company, Proton also knows the wants and needs of the local market. Proton will be infusing all the features to make Boyue more attractive and relevant to Asean countries," he added.
Hezeri said he expected 2018 to a busy year at Proton's plant in Tanjung Malim with its preparation to produce the SUVs.
"And most importantly, this partnership with Geely will give Proton the long overdue economies of scale.
"Previously when producing the Iriz model, the R&D cost alone was RM600 million and to recoup this amount, more than 400,000 Iriz cars need to be sold, an impossible feat should we only market locally," he said.
In addition, with Geely, Proton will soon be able to ride on its partner's vast network in the China market while Geely will use Malaysia as the platform to enter the 600 million population South-East Asian market.