MARCH 6, 2000

Petronas completes Proton purchase

PETRONAS has acquired a majority shareholding in Malaysia's national car company Proton, after more than a year of negotiations.

PETRONAS has acquired a majority shareholding in Malaysia's national car company Proton, after more than a year of negotiations. The deal could have a profound effect on the oil company's involvement in Formula 1 in the years ahead with suggestions from Malaysia in recent months that Petronas will commission Proton subsidiary Lotus Cars to design a Formula 1 engine for the future. Petronas agreed to pay $271m for a 25.7% share in the company which was previously owned by Hicom. Proton has also bought Hicom's automobile distribution network EON.

The deal means that Proton will now be able to concentrate on future expansion with Petronas paying the bills. Government-owned companies still control 25% of the company and so with the Petronas investment the company will remain firmly under government control. Mitsubishi Motors now hold only 17%.

In recent years Petronas has funded the design and production of prototype production car engines for Proton at SauberÊPetronas Engineering in Switzerland. These engines were completed last year and are expected to go into production in Proton factories in Malaysia in 2001. Petronas's plans to design a Formula 1 engine were, however, postponed indefinitely after the economic problems in Malaysia in the autumn of 1998.

Proton and Petronas already have a joint venture in Britain called Advanced Engine Research which has been involved in development of racing engines for the Vauxhall team in the British Touring Car Championship.

When the deal was announced Proton boss Mahaleel bin Tangku Ariff said that it will allow Proton to produce the very first Malaysian-designed car in 2003. This is expected to use the engines which have been developed by SPE. As a means of promoting the company it makes a lot of sense for Proton to be involved in a Formula 1 engine program and there is no doubt that Lotus Cars could do the design work. Although the company no longer has any F1 specialists it has produced a variety of engines in recent years for major manufacturers, notably General Motors. The last Lotus F1 engine design was in the mid-1980s when Tony Rudd and his team designed a secret direct-injection turbocharged F1 engine for Toyota. The engine was tested but the company decided against continuing. Since then many of the Lotus engine designers have moved elsewhere with a number of them now working together at Prodrive. However, most of the automotive companies involved in F1 have had to hire specialist engine designers when they need them so a Lotus-designed F1 engine should not be excluded as a possibility.