Earlier today, DRB-Hicom announced that it had reached an agreement with Zhejiang Geely for the Chinese carmaker to acquire a 49.9% equity stake in Proton.

Both parties expect to sign the definitive agreement for the deal – which is subject to regulatory and shareholder approval – before the end of July 2017. The deal will also see Geely acquire a 51% majority stake in Lotus as part of DRB-Hicom’s full sale of the British sports car maker.

Questions about Volvo production were also raised during the media briefing following the announcement ceremony today. Currently, local assembly of Volvo cars are being carried out by Volvo Car Manufacturing Malaysia via its Swedish Motor Assemblies plant in Shah Alam, and it was asked whether the Proton-Geely deal will bring about change in local assembly operations, since Geely owns Volvo Cars. It acquired the Swedish automaker from Ford in 2010.

In response to that, DRB-Hicom did not disclose whether there would be any changes, saying that details, if any, will be revealed following the signing of the definitive agreement. Group MD Datuk Sri Syed Faisal Alba did hint that since Geely is looking to grow the Volvo market in Malaysia, there is a probability that it will use Proton to assemble Volvos and pay an assembly fee.

At present, Volvo’s local assembly operations has an output of 1,500 units, but the company said earlier this year that a RM20 million restructuring of its Shah Alam plant will allow it to eventually raise total production up to 5,000 cars a year. It is set to increase capacity by 50% this year, followed by another 50% next year.

Though it wasn’t mentioned, there is also the possibility of the Chinese company utilising Proton’s Tanjung Malim plant as a base to build right-hand drive versions of its Lynk & Co 01 SUV, as reported back in March. It is said that Geely is eyeing at exporting the offering from its new sub-brand to various markets like the UK and Australia.

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