When I first heard that Proton (tag) was selling Agusta of Italy for €1, in my mind, it’s purely economics and it’s an acceptable immediate loss cutting step. Now, with this new cooperation with Volkswagen of Germany, it’s rumored that Proton might cut its ties with Lotus. For me, this is starting to go beyond economics. According to Business Times:
This was the second provision Proton made for the year after RM165 million set aside in the first quarter. “(The sale) may be a prelude to a tie-up with VW. The German carmaker may have stipulated the sell-off of loss-making non-core assets as a precondition to taking up a strategic stake in Proton,” Mayban Securities added.
The research house speculates that the next major non-core asset to be sold could be its Group Lotus plc unit, as it reckon VW has superior engineering expertise and experience in performance cars in the Lamborghini and Bugatti marques.
“Lotus would, therefore, be a duplication of resources. At this juncture, this view is purely speculative,” said the research house.
I first came across it here:
1316 [Dow Jones] STOCK CALL: Mayban Securities speculates Proton’s (5304.KU) sale of 57.8% Agusta stake “might be a prelude to a tie-up with Volkswagen”. Move also shows new Proton management prepared to bite bullet, make painful decisions so as to turn around Proton. Also speculates Proton may sell 100%-owned sports carmaker Lotus in run-up to VW tie-up. But admits, “at this juncture, this view is purely speculative.” Keeps Trading Buy call with MYR7 target price. Shares +2.4% at MYR6.30.(CAL)
I hope that Proton would hold on to Lotus. I hope, however the people inside Proton do the cost and benefit analysis, the result is that keeping Lotus brings on net benefit to Proton.
And if I weren’t an economics graduate, I would say, screw the German and keep Lotus.
2 replies on “[696] Of Proton to sell Lotus?”
Never heard of Lotus Elise?
Lotus is an illustrated British car manufacturer.
p/s – if proton’s a failure, it doesn’t mean it needs dumping.
Where’s Lotus from? Never heard of it before. Cool name though :P
P.S.: Proton’s a failure. It started at the same time as Hyundai and earlier than Kia, both of Korea, and now both of them have managed to obtain respectable international market shares and become world brands. And Proton? It still needs to cling on to protectionism from the government just to survive inside Malaysia, and has almost no standing internationally.