Proton and Honda plan to collaborate on a wide range of projects, including technology, new models, platforms and facility sharing. Proton has been looking for a foreign partner for several months. Speaking in September this year, the Managing Director of Proton’s parent company DRB-Hicom stated that several foreign strategic partners had been targeted and talks launched, but he declined at the time to reveal their identity.
In an announcement to Bursa Malaysia, Proton now states that it has signed a Collaboration Agreement with the Japanese OEM to explore a range of projects. It notes: “This Agreement signifies the potential of a long-term strategic collaboration with Honda Motor. Having a strong and renowned global automotive player like Honda Motor as the foreign strategic partner to Proton will provide Proton and the DRB-Hicom Group with the opportunity to grow as an Original Equipment Manufacturer (OEM), as the opportunities are endless.”
Details of the proposed partnership have not been released, but additional information could come out when DRB-Hicom outlines its new business plan for Proton in November. Speaking earlier this month, DRB-Hicom’s Chief Operating Officer, Che Khalib Mohamad Noh, was quoted by Bernama as stating: “Everybody is waiting to see what DRB plans to do with Proton. We are working on a plan now and hope to come up with it by next month.”
Competition in Malaysia is heating up and although Proton still dominates the local market, it has seen its market share slide. Car ownership levels are reasonably high already, limiting the market’s potential for additional growth. As protective tariffs are lowered, however, overseas OEM see a chance to gain entry and the share of the market held by local OEMs Proton and Perodua will likely contract further, as neither OEM has effectively used its protected domestic market to prepare for the increase in competition.
Former Prime Minister of Malaysia and Proton Advisor Mahathir Mohamad had said earlier this year that the OEM would need a huge capital injection from the private sector in order to compete in the global market. “A car company needs to market more than one model; we will need at least five models. As Proton is not that big, the profits are not enough to produce many models,” Bernama quoted Mahathir as saying.
