Business
Malaysia's Proton still keen on VW tie-up - paper
January 26, 2006
KUALA LUMPUR (Reuters) - Malaysia's largest car maker, Proton, remains keen to team up with Volkswagen AG despite the German firm's sudden pull-out from a joint venture plan, a newspaper said on Thursday.
State-controlled Proton, the brainchild of former Prime Minister Mahathir Mohamad, was knocked by VW's abrupt move to ditch a planned joint venture after Proton and the Malaysian government blocked its plan to take control of Proton.
The entry of VW, the world's fourth-biggest car maker, had been seen as a lifeline for Proton as it battles growing competition from Japanese and South Korean brands. The German firm's departure fanned speculation of tie-ups between Proton and other auto makers.
"We are still interested in forging a relationship with Volkswagen. We are hoping for a positive response from them," the Star newspaper quoted Proton's new managing director Syed Zainal Abidin Tahir as saying. He did not elaborate.
A Proton spokesman was not immediately available for comment.
Proton said recently that VW's desire to take a stake in Proton "would have compromised Proton's independence and would be highly inappropriate for Malaysia's national car company."
The Star on Thursday quoted Syed as saying Proton was also in talks on strategic partnerships with several unnamed car makers.
"We want to be selective in choosing the partners and it should be a win-win arrangement where we can get technology, models and expertise," he said.
Syed also told the Star that Proton would look into extending a relationship with Mitsubishi Motors Corp. (MMC). The Japanese firm said this week it was open to forming a technology alliance with Proton.
MMC was one of Proton's founding members and a major shareholder until its own financial difficulties forced it to sell its 8 percent stake in early 2004. MMC still supplies auto parts to Proton.
Mahathir, in comments carried by the official Bernama news agency on Thursday, confirmed Proton's intention to work with Mitsubishi."They told me. They wrote to me saying they want to," he said. He gave no details.
Auto analysts said other potential candidates for a non-equity alliance with Proton include South Korea's top car maker Hyundai Motor Co. Ltd.
In his first interview since taking the helm this month, Syed outlined steps to turn around loss-making Proton -- including cutting costs, raising margins, improving distribution and phasing out older models, the Star said.
Proton will also look at getting into the fast-growing Indian and Chinese markets, Syed told the paper.
Proton shares were down 1.9 percent at 5.30 ringgit ($1.43) at 0648 GMT. The stock has nearly halved since last July, sharply underperforming a 4.5 percent dip on the main Kuala Lumpur stock index over the same period.