Malaysian OEM Proton partners with several Chinese tier-1 suppliers to strengthen domestic supply chain

Proton, Malaysia’s national carmaker, has entered into agreements with six Chinese tier-1 suppliers that will see both hardware and software for new Proton models be manufactured within Malaysia.

The new agreements were organised through a strategic partnership between Proton and Chinese automotive company Zhejiang Geely Holding Group. They include four joint venture agreements (JVs) and two technology transfer agreements (TTA) covering components for both ICE vehicles and EVs.

Details of the four JV agreements: 

• Malaysian manufacturer Delloyd Technology will produce Imotion Automotive Technology (Suzhou) Company’s advanced driver assistance systems (ADAS).
• Shanghai Yinlun Heat Exchange Systems Company will see its heating, ventilation and aircon (HVAC) system be locally produced by Trillion Speed (M) Sdn.
• PEPS JV (M) Sdn. will produce Liuzhou Sanly Autoparts Company’s braking systems.
• JHM Consolidation Bhd and Jiangsu Dekai Auto Parts Company will begin joint headlamp production at the former’s Malaysian plants.

The first TTA, meanwhile, featured SHJ Interia Sdn Bhd and Changchun Fawsn Automotive Trim Co examining new manufacturing approaches for interior components, including headlining. The second TTA focused on software. Malaysia’s Xenso Electronics Sdn Bhd and China’s Freetech Intelligent Systems Co Ltd will collaborate on ADAS detection systems to improve the blind spot monitoring and lane change assist of Proton models.

Proton hopes that the increase in domestic production will have the dual benefits of boosting manufacturing efficiency, as well as shoring up resiliency in the supply of more complex components. Wang Huaibing, Proton’s chief procurement officer, commented that “with high tech components becoming increasingly prevalent in our models, it is important for Proton to bring their development and production of these components into the local ecosystem”. 

Increased interest in localised production in ASEAN 

In the wake of recent supply chain disruptions, such as the recent tariff conflict between the US and China, OEMs are increasingly taking steps to nearshore and localise production. 

Audi, for example, has also invested in increasing its production capabilities in Malaysia. It launched its return to manufacturing in the country earlier this year with the Q7 SUV, which is fully assembled from locally produced components. Dr Susanne Lehmann, managing director of Volkswagen Group Malaysia, pointed to the focus on localised assembly as being integral to maintaining resiliency in the supply chain and ensuring that customers “continue to experience the same Audi quality, performance and luxury.”

To learn more about the benefits of nearshoring, check out our Top 10 list of nearshoring Red Sofas, which feature insights from experts from across the industry:

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