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Kuala Lumpur: The privatisation of Malaysian carmaker Proton is seen as a positive move.
Analysts said, it will help speed up the liberalisation of the country's automotive industry.
They also note, however, that more needs to be done to unlock its full potential.
The Malaysian national carmaker Proton is set to be given a new lease of life.
State investment holding arm Khazanah Nasional has agreed to sell its 42.7 per cent stake to home grown automotive and industrial conglomerate, DRB-Hicom.
And investment analysts said, this may set Proton on course to profitability.
Ahmad Maghfur Osman, auto analyst, OSK Securities, said: "The main intention of divestment is basically to change the management structure of proton, how the company is run with DRB Hicom coming in, by getting their hands dirty, means they will do whatever they can to turn around the company."
Proton's earnings been on a downhill slide, hurt by huge expenses of its wholly-owned Lotus Group and under-utilisation of its plant at Tanjung Malim.
The entry of DRB-Hicom which has existing collaboration and licence agreements with German auto giant Volkswagen may just be what Proton needs to turn itself around.
The fact that both showrooms of Proton and Volkswagen are located so closely with each other is no coincidence. Analysts said Proton can ride on Volkswagen's extensive distribution network worldwide to market its products globally while capitalising on Volkswagen's R&D expertise to come up with appealing models to elevate the national car's status.
Helmed by Malay tycoon Syed Moktar Al Bukhari, DRB said it will be detailing a new business model for Proton which includes product renewal and enhancement.
Analysts expect Proton to lead the way in spearheading to become a regional hub for hybrid and electric cars.
Ahmad Maghfur Osman said: "Making Malaysia a hybrid hub is what they are banking on. They are losing in terms of policies. Indonesia is getting a lot of attentions from automakers, it's also a very appealing market it has there. Thailand has a very established base, a very established supply chain."
But more needs to be done.
While the government can offer tax rebates to encourage consumers switching to pricier hybrid cars, it needs to relax its national auto policy to attract foreign automotive investments.
- CNA/ck
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