Zhejiang Geely Holding Group, the Chinese carmaker, on May 24 agreed in principle to buy 49.9% of Proton, the Malaysian carmaker, from local conglomerate DRB-Hicom for an undisclosed sum.
Geely will buy a 49 per cent controlling stake in Proton from its owners DRB-Hicom, and as part of the deal it will also buy DRB-Hicom's entire stake in Lotus.
With Lotus, Geely is gaining one of the most famous brands in the automotive industry, as well as decades worth of engineering and racing expertise missing from its current portfolio. It said the companies plan to sign a final agreement in July.
But Mahathir, who has become a stern critic of Najib in recent years, opposes the sale of Proton to foreigners. An all-new phase of development and accelerated product rollout strategy will see new Lotus cars rolling on the street much sooner than what was planned at the brand.
Proton's performance has always been a point of political tension between Najib and former prime minister Mahathir Mohamad, with the former often pointing to the carmaker's woes as evidence of the latter's mishandling of the economy. Shanghai-based SAIC Motor Corp moved to build a plant in Indonesia in 2015 and formed a joint venture in Thailand three years earlier, while Dongfeng Motor Group 0489.HK is also interested in the region.
Geely was previously reported to have backed away from a potential deal for Lotus' owner, the Malaysian auto firm Proton.
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Proton also gives Geely access to right-hand-drive markets around the world, including Malaysia, the UK, India and Australia.
This is in view that Geely has a proven track record of rescuing renowned Swedish automaker Volvo, which it bought in 2010, and sales of the Swedish brand exceeded the half a million mark within five years.
Like the taxi, Lotus could also benefit by tapping into Volvo's supplier network for less money than Lotus could negotiate independently.
The two parties signed the agreement at a ceremony in Putrajaya witnessed by Malaysia's Second Finance Minister Johari Abdul Ghani.
The cash-heavy Geely - previous year it attracted $US400 million to help it build electric taxis in the first-ever foreign fundraiser by a Chinese vehicle maker - will also gain instant access to key south-east Asian markets, as well as tapping into the Proton/Lotus research and development centres, and manufacturing facilities.
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