Geely to take majority in Lotus, minority in Proton

China’s Zhejian Geely is expected to take a majority ownership in Lotus. This is part of an agreement to invest in the British sports car maker’s parent company, Proton. Geely Holding Company, owners of the listed car manufacturer Geely, is also expected to take a 49 percent stake in Proton.

The sale to Geely is a part-requirement set by the Ministry of International Trade And Industry (MITI) required for Proton to do, when Proton was offered a RM1.5 billion soft loan last year by MITI. MITI have requested that Proton seek out a “strategic foreign partner” to sell a stake of their company in order for Proton to receive the soft loan.

The deal with Geely is expected to be announced by Group Managing Director of DRB-HICOM Berhad, Datuk Sri Syed Faisal Albar later today, and is subject to due diligence and necessary regulatory approvals.

Within this deal, it will include Geely taking control of Proton’s Norwich-based subsidiary, Lotus with a stake of between 50 percent and 75 percent. Lotus made losses to the tune of over £27 million last year. Sales fell year on year in 2016 by 242 to 1,584 vehicles.

Geely is also expected to takeover the Tanjung Malim plant and will focus on making the automotive plant to reach optimal manufacturing capacity in the near term.

Reports emerged earlier this year that PSA, makers of Citroën and Peugeot were also in the running to buy a stake in Proton. But the negotiations fell through a few months of talks.

Proton was founded in 1983 by former PM, Tun Mahathir Mohamad and at one time dominated the local market share with every 3 in 4 being a Proton. Today, the market share has dropped significantly, hovering at around 15 percent. Last year, Proton sold 150,000 vehicles only.