The flurry of news activity reporting Chinese automaker Geely as the leading candidate to become Proton’s potential foreign partner hasn’t just stirred the movement of shares at both Geely and DRB-Hicom, which fully owns the national carmaker. It has prompted a response from the latter with regards to matters – and reservations – pertaining to the possible tie-up.

The Malaysian corporation said via a statement that the interested parties – reported to be Geely and Groupe PSA – have conducted their own due diligence on Proton, and DRB-Hicom is now waiting for the submission of bids from the parties, after which an earnest evaluation of the bids will commence.

It reiterated that it aims to complete the selection by the first half of this year, although it is striving to conclude the deal earlier.

With regards to the tie-up itself, DRB-Hicom said it believes that Proton can be a more successful carmaker once a foreign strategic partner (FSP) is on-board. It added that the entry of a FSP will enable Proton to revitalise itself through access to new platforms, powertrains and technologies which will further improve the Malaysian company’s range of products and its quality.

“This revitalisation of Proton’s market share underlines DRB-Hicom’s intent to keep the brand as a player in the automotive market. We remain committed to revive Proton’s fortunes, and finding the right FSP is critical to that goal,” said DRB-Hicom group MD Datuk Seri Syed Faisal Albar.

“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,” he added.

He said that DRB-Hicom will evaluate three key criteria – which are the strategic, operational and cultural fit – in finding the right FSP for the Malaysian carmaker. A strategic fit will enable both parties to derive tangible benefits from the range of technology and products available, which will ensure that Proton can achieve economies of scale from its domestic operations.

An operational fit with the FSP ensures that both Proton and the partner will complement each other’s strengths, while 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 its short and long-term plans.

With a close fit that matches the items listed, DRB-Hicom said it is confident the venture will be beneficial to all parties. It added that in evaluating a potential partner, DRB-Hicom will insist that the Proton badge and its technology will be expanded into ASEAN markets first and global arena subsequently.

The automaker’s parent company also said that there was little to fear that a partnership would be a lop-sided deal.

“Contrary to common belief, Proton 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,” Syed Faisal said.

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

“The plant has a low utilisation 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,” he said.

Finally, Proton would also be bringing into play its own in-house research and development team as well as that offered by Lotus Cars UK. The combined engineering capabilities of both teams will offer the FSP enhancements to its own current capabilities.

Syed Faisal stated it was 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 it, and Malaysia, on the global map,” he explained.

He added that as a responsible shareholder, DRB-Hicom will also assess the intention of the potential partner in utilising the current “home-grown” vendor network during its evaluation.

“This is a very significant element in our evaluation, as DRB-Hicom, which also owns subsidiaries serving Proton as vendors, will avoid having the “home-grown” network being diluted substantially,” he added.