Lotus forms joint venture to build cars, engines in China

KUALA LUMPUR (Bloomberg) -- DRB-Hicom's British sports-cars unit will form a joint venture with China's Goldstar Heavy Industrial Co. to produce Lotus-branded cars and engines in the world's biggest auto market.

The proposed venture will initially study production and sales of vehicles and parts, DRB-Hicom said.

The venture will entail an investment of 10 billion yuan ($1.6 billion) over 15 years, and will make and sell vehicles and engines within 24 months of obtaining a license, it said.

DRB-Hicom, controlled by tycoon Syed Mokhtar Al-Bukhary and owner of both Proton Holdings and Lotus Group International, has been trying to restructure Lotus after inheriting the British company through its purchase of taxi and sedan maker Proton in 2012.

Manufacturing in China allows companies to avoid the nation's 25 percent import tariff.

The Malaysian company will raise the funds required for the venture through internal accruals and borrowings, according to the filing.