Volvo Owner and PSA in Race to Snap up Lotus, Parent Company, or Both

There’s a battle brewing between France and China over a famous Malaysian-owned British automaker. Who said globalization was in danger?

Geely, Volvo’s Chinese parent company, is in talks to buy Proton, the Malaysian owner of the famed Lotus brand, the Financial Times reports. Proton’s not doing well these days, all thanks to an influx of affordable imports that has eroded its domestic market share. To reach its goal, Geely must first stave off stiff competition from Europe.

France’s PSA Group, maker of Peugeot and Citroën (and potential future owner of Opel and Vauxhall), also wants to get its hands on Proton. However, it looks like the competing automakers want different things from the deal.

Either automaker could submit a bid at any time, FT claims.

Renault has reportedly dropped out of the running to buy Proton, which is owned by DRB-Hicom, a Kuala Lumpur-listed conglomerate. The parent company needs help building more competitive cars under the Proton brand. Of course, purchasing the company would also net the buyer Lotus — a storied sports car company that is struggling to return to profitability.

Geely seems primarily interested in Proton’s huge Malaysian factory, which would allow it to produce up to 600,000 right-hand-drive vehicles per year. The automaker’s Chinese facility only makes left-hand-drive vehicles, and Proton could give Geely access to the large Southeast Asian market. PSA, which has just begun selling vehicles in the region, wants the same market penetration.

However, Geely’s interest in Proton could be limited. According to a source that spoke to Malaysian media outlet The Star Online, the Chinese automaker might just want Lotus.

“Proton is of no use to Geely,” the source claimed. “It wants Proton because of the auto technology in Lotus. And for PSA, which is strong in sport-utility vehicles (SUVs), it is not keen on Lotus.”

Reportedly, the French automaker wants to build its own plant in the country. “PSA is a latecomer in this region,” the source stated. “Now it sees the opportunity to penetrate the Asean market of 600 million people by using Malaysia as a base to export its vehicles tax-free to any of the 10 Asean members.”

Should it gain a majority stake in Proton, PSA plans to move the automaker’s Shah Alam plant to its under-utilized plant in Proton City. It also plants to build SUVs for the Southeast Asian market.

[Image: Lotus Cars]