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by Brett Davis

The Malaysian government-owned Proton Holdings Bhd may sell its stake in Lotus Group International, according to a recent Bloomberg report. Head of HwangDBS Investment Management Bhd, Gan Eng Peng, is one such investor who believes a sale is on the cards.

Proton’s profit dropped 76 per cent last quarter, fuelling earlier speculation that the company may sell off its Lotus share. Doing so could allow Proton to focus on its domestic market and invest in new local production facilities.

“It will make sense for them to sell it,” Peng said. “Proton and Lotus are not a good fit. They are in different market segments, both in terms of geography and product.”

On the other hand, Lotus CEO Dany Bahar, who helped come up with six all-new concepts for the 2010 Paris motor show, previously said these concepts would form production models that would help Lotus break even by 2014. But he also said,

“Without the funding support and the guarantees given by the Proton group, we would not survive, end of story.”

The concepts included a new Lotus Esprit, Lotus Elan, Lotus Elise and a new Lotus Elite. An all-new V8 engine for the Esprit is apparently well into the development stages.

Interestingly, since Proton bought Lotus in 1996, the company hasn’t made a profit. Even if the company was profitable, it’s still only said to be worth around $316 million. Analysts say Lotus needs to sell around 8000 vehicles per year to become profitable, up from its current annual sales figure of less than 2000.