Geely’s multi-billion ringgit bet on Malaysia part of Asean drive
15 Aug 2023
Zhejiang Geely Holding Group Co Ltd’s planned multi-billion ringgit expansion in Malaysia, at the expense of Thailand, is a precursor to the group driving its footprint in Asean, industry specialists said.
They said the Chinese carmaker’s decision to focus on Malaysia as its hub is apt given its established ties with the government via Proton Holdings Bhd.
Prime Minister Datuk Seri Anwar Ibrahim had revealed in July that Geely would kick off investment worth US$10 billion to turn Tanjung Malim in Perak into the region’s largest auto city.
The announcement came shortly before reports on Geely’s investment in Thailand surfaced.
It was reported that Geely was supposed to enter the Thai market with electric vehicles (EVs). But local publication, Headlight Mag, noted that Geely had axed the plans and was shifting its focus to Malaysia instead.
The publication also stated that Geely was set to invest into car production in Thailand worth 10 billion baht, with an estimated annual capacity of 100,000 vehicles.
Independent automotive analyst Shamsul Yunos told the New Straits Times that Proton has always had plans to become a hub for Geely.
“However, that has yet to materialise. The regional automotive industry, although open under Asean Free Trade Area, is still quite country centric and companies that operate within the region tend to focus their investment according to the best requirement of the country they are in.
“Geely has developed a good relationship with the Malaysian government through Proton and it makes sense that they would explore further investments in Malaysia as a way of increasing their Asean footprint,” he added.
Shamsul said EV is expected to become a significant segment in the local automotive industry from 2025.
He noted that the current investment in a new engine assembly plant and new body assembly line in Tanjung Malim has given Proton more capacity to assemble Geely-sourced products such as the X50, X70 and X90.
“Although there is no current concrete announcement about local assembly of EV models, this is widely considered to be inevitable as the Malaysian government seems to have opened the EV floodgates with total import duty and excise duty exemptions on these new technology vehicles.
“As the two dominant automotive brands in Malaysia, Proton and Perodua stand to lose the most if the EV market takes off and they are unprepared, therefore it only makes sense that they will invest in local EV capacity,” he said.
Industry specialist Hezeri Samsuri said Geely’s investment in Malaysia might be done based on better incentives for the company when it signed up with the Automotive High-Technology Valley programme in Tanjung Malim.
“Apart from that, by rebadging Geely’s products as Proton here in Malaysia, Geely is assured of a big market to help sustain its Asean project,” he said.
Hezeri added that the assembly of Geely’s EVs at Proton is dependent on market requirement.
At present, he said Geely is using Proton to assemble its products and one variant of its engines, but mostly for local consumption.
“If there is a market for EV, I am sure Proton will be used to assemble them here. But to have an indigenous EV product, I do not think so because the cost is too high and Proton’s brand is too weak to be selling high tech products abroad.
“There is no harm in rebadging Geely products as Protons because with only the domestic market to please, that would be the best solution, economically,” he added.