Malaysia Hints that Proton May Sell Majority Stake

Struggling carmaker Proton Holdings Bhd may be prepared to sell more than half its equity to a foreign partner, The Star reports.

Malaysia’s International Trade and Industry Ministry says a deal will revive sales and bolster the country’s automotive supply base. MITI offered the assessment in response to a question by Parliament about the rationale for selling a 51% stake in Proton.

Proton’s owner, DRB-Hicom Bhd has declared it will remain a “substantial” shareholder in the carmaker. Proton was launched in 1983 as a government-backed company.

The ministry says a turnaround would enable Proton to “return to its glorious days” when the company accounted for 70% of Malaysian car sales. Proton’s market share has since eroded to 15% because of a reputation for poor quality and competition from cheaper and more advanced Japanese models.

The carmaker is required under terms of last year’s 1.5 billion-ringgit ($337 million) bailout loan from the government to find itself a foreign investor by this summer. PSA Group has emerged as the most likely bidder after China’s Zhejiang Geely Holding Group Co. threatened earlier this month to drop out.