Malaysia Dateline

Giddy With Excitement: Proton’s Strategic Tie Up With Geely For the Third Automobile, Hit or Miss?

As this is written, Tun Dr Mahathir Mohammad’s entourage, which included five cabinet ministers and the Chief Minister of Perak, is going through the motion of meeting key VIPs in China as well as Malaysian Chinese based in China.

Doing the latter has been a trade mark diplomacy of Tun Dr Mahathir: do not forget the people who support you to be the Prime Minister, even when abroad. It is a trait worthy of all Malaysians to emulate, ideally all leaders.

This leads us to Geely, the Chinese automobile giant, that managed to make USD 1 billion in 2014, after turning around a loss making Volvo, having first acquired it just few years prior. Tun Dr Mahathir has visited it, and there is a strong likelihood of a USD 10 billion Investment in Tanjung Malim, Perak, to make the next generation cars. Why Tanjong Malim ? That is where Proton City.

Geely now owns 49.9 per cent of Proton, with 51.1 per cent still owned by DRB Hicom. Regardless of who owns what or who, Tun Dr Mahathir is pragmatic.

In this sense, Tun Dr Mahathir is not unlike the late Chinese Paramount leader Deng Xiao Ping who famously said: “It does not matter whether it is a black cat or a white cat. A cat that can catch a mouse is a good cat.” YB Salahuddin Ayub, before he joined the trip to China, also explained this in an interview to the Malaysia Dateline.

Indeed, Tun Dr Mahathir who first met Deng Xiao Ping in Malaysia in 1980, when the former was still a Deputy Prime Minister is known to know the essence of the quote, and has quoted Deng as a great pragmatist too.

Of course, by his own admission, Tun Dr Mahathir had failed before, if not repeatedly. He once lamented the fact that he was bad at choosing his successors as Abdullah Badawi and Najib Razak both failed to perform. So there is a limit to being a pragmatist. One must be wise and helped by a good cabinet and team too.

To make matters worse, the wrong successors tried to change every single aspect of Tun Dr Mahathir’s policy. Indeed, much as Tun Dr Mahathir has a steely personality, he is actually quite adaptable.

Prior to heading to China on August 17, for instance, he welcomed groups of Perdana Leadership Fellows in Putrajaya to intern with various ministers.

This program was the brainchild of Khairy Jamaluddin, the Member of Parliament of Rembau, who once defeated Mukhriz Mahathir in the race for the post of the presidency of UMNO Youth. Tun Dr Mahathir welcomed all the fellows anyway, and encouraged them to serve the country. Geely and Chinese leadership could not have missed this pragmatic and increasingly wise streak of Tun Dr Mahathir.

Indeed, Geely’s plan is to make Proton profitable by 2020 or 2021. This is by slashing the cost of the car manufacturing process by 30 per cent. But Geely is not even the top car maker per se in China. As can be seen from this list below:

A. SAIC motor (2,2600,579 units in 2015)

B.Changan Automobile (1,540, 133 units in 2015

C. Donfeng Motor (1,209,296 units in 2015)

D. BAIC (1,169,894 units in 2015)

E. Geely (which is not state owned prpduced 999,502 units a year in China)

There are other car manufacturers in China that are top notch too. They are either state owned, or privately owned, as is the case with Geely.

One has not even gone into Great Wall Motors, which is private, JAC Motors which is state owned, and Brilliance Auto which is again private; and Chery which is state owned and finally FAW which is state owned too.

The total unit of cars produced in China have gone from nearly 15.5 million units in 2012 to 24.4 million units in 2016. China, in other words, is a major car production and assembly center in the world. In comparison, Thailand produced 2 million units a year.

To be sure, no one knows whether Geely can succeed or not, although sales of Proton seems to be picking up slowly, this from being a top market leader in 1980s-1990s where the market share was nearly 75 per cent to close to 20 per cent today.

But, if news account in China are accurate, there are two companies backed by Geely and Nissan that are willing to invest up to USD 10 billion in the car assembly making facilities in Proton City in Tanjung Malim, Perak as mentioned earlier.

This explains why the Chief Minister of Perak needs to be at the trip in China with Tun Dr Mahathir Mohammad, Darryl Leiking, the Minister of International Trade and Industry too.

With USD 10 billion invested into a potential E car, or, even hydrogen fueled car, Tun Dr Mahathir is not clutching at straws.

By 2030, there will be some 700 million middle class consumers in ASEAN. If Thailand can succeed as a top car assembly maker of Japan in Southeast Asia, the likelihood of China doing the same in Malaysia and Indonesia, there is no reason why the third national automobile is a proverbial dead duck.

But a third automobile, as Tun Dr Mahathir invariably wants as a supplain chain or vector distribution, is worth a shot with the help of China. It can enable the workmanship and wealth making abilities of Malays and Malaysians alike to keep improving. Therein the genius of Tun Dr Mahathir. Although he has gone to China to discuss 1MDB and China debts, Tun Dr Mahathir has begun delivering results that are increasingly deep and wide ranging to create a new Malaysia.