cars news 10: Report: Geely, PSA Vying for Stake in Lotus and Parent Company Proton

Two automotive companies have placed bids for a stake in Lotus, along with its parent company Proton, says a report from Bloomberg. Geely, the Chinese automaker that owns Volvo, and PSA Group, which owns Peugeot and Citroën, have both submitted offers for a piece of Malaysian automaker Proton.

The exact size of the stake will be determined after a suitor is chosen, but offers are currently being evaluated, according to a person familiar with the negotiations. A PSA spokesman told Bloomberg the company is “still in the negotiation process and wish to go further with Proton.” PSA is also in talks to buy GM’s European brands Opel and Vauxhall.

DRB-Hicom, which controls Proton and Lotus, said in a statement earlier this month that it will announce its choice for a foreign strategic partner within the first half of 2017. Proton has racked up considerable debt while its sales have declined, though Lotus has been making slow progress thanks in part to an updated Evora sports car. Lotus also plans to launch a new Elise sports car and its first-ever SUV by 2019.

A report from Malaysian newspaper The Star says a controlling stake in Proton could go to PSA, but Lotus may be offered to Geely. According to the paper, Geely was more interested in Lotus than it was in Proton as a whole during earlier negotiations with DRB-Hicom.

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

If the plan to split up Lotus and Proton comes to fruition, Geely would gain a storied sports car brand and its technology, and Lotus could gain access to Volvo’s scalable platforms, which would make for a good starting point for a Lotus SUV. Alternatively, Geely could just give Lotus the cash it needs to do its own thing as it has done with Volvo since taking ownership in 2010.

Source: Bloomberg, The Star