Shares of Geely Automobile soared to record levels last week following the report that the Chinese automaker was leading the race to become Proton’s foreign partner, the South China Morning Post reports.

Last Friday, Geely shares climbed by as much as 9% in the day’s trading on the Hong Kong Stock Exchange, ending the day 8.4% higher at HK$9.75 (RM5.56) following the initial news report by The Star, which named the company as the front runner in the potential acquisition.

Competing for a stake in Proton is Europe’s second-largest carmaker, Groupe PSA. Both companies are reportedly undertaking due diligence work actively at Proton’s headquarters, but sources familiar with the matter said that Geely is appearing to show more interest.

Both automakers are eyeing a 51% majority stake in Proton’s manufacturing plant in Tanjung Malim. The government has given the green light for a foreign company to own a majority stake in the assembly plant, The Star had reported. Proton said it was aiming to announce its foreign partner in April.

If Geely is successful in its bid, securing the deal will add 150,000 units of annual capacity to its output and give the Chinese carmaker a fast-track access to Asean’s 10-member market, which has a combined population of 623 million people.

Analysts however cautioned that the biggest challenge facing Geely – which owns Volvo and the London Taxi Company as well as Lynk & Co, a sub-brand – will be to turn things around at the Malaysian automaker, which has been suffering from sliding sales and market share.

According to a foreign analyst cited by the SCMP, it will take Geely at least a couple of years to turn the business around, and the company would also have to invest heavily in order to establish its presence in the region.

Last November, the Chinese company said it was considering a technological cooperation with Lotus, denying initial reports that it was seeking to buy out the British sports car maker, which is owned by Proton.