The Chinese parent company of Volvo, Geely, has reportedly done a swift three-point turn out of a deal to buy Malaysian auto maker, Proton, which owns British iconic car brand, Lotus.
According to the Sunday Times, talks between Geely and Proton have stalled, leaving a question mark over the future of Lotus.
Lotus has been owned by Proton since 1996 and has been in the cross hairs of both Geely and French car manufacturer, PSA, as a possible acquisition target. Peugeot owner, PSA, has reportedly also shown interest in making a bid for Lotus.
PSA's lurch at Proton arrives at the same time as the company pursues a deal to buy American General Motors' Opel and Vauxhall brands. If PSA is successful in acquiring Opel and Vauxhall, it would then rise to become Europe’s second biggest car manufacturer after Volkswagen.
Geely and PSA are one of many Proton suitors which is said to have to have included Renault, Volkswagen, and Suzuki.
Proton was founded by the Malaysian prime minister, Mahathir Mohamad, and following financial troubles at the firm, his government provided the company with a loan of a RM 1.5bn, approximately $362m. The loan was originally made on the basis that its parent company, DRB-Hicom finds an overseas partner, which would also invest in the firm.
Malaysian international trade and industry minister, Datuk Seri Mustapa Mohamed, said last year that Proton’s business model is “not sustainable”, The minister said that the government’s entry into the automotive market should not be expected to continue protecting the market and “needs to graduate from this protection.”
In a statement, Mohamed said the loan was agreed to be awarded to the national car maker back in April 2016. "Proton will remain a fully private company and its management will be fully responsible for its business decisions,” he said.
The statement followed speculation that the government loan may subsequently be converted into ordinary shares, making the government the controlling shareholder in the company.