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Proton Needs Volkswagen to Survive

In the news: Europe's largest automaker andforeign alliance with Mitsubishi Motors Corp.
producer of Volkswagen relay said that itsunfortunately the partnership didn't last
ongoing talks with Malaysia's Proton Holdingslong and ended in 2004. There are two other
Bhd are already at its advanced stage sinceautomakers that are discussing the
it is really planning to seek a platform topossibilities of partnership with Proton, the
expand  its  market  in  Southeast  Asia.PSA Peugeot Citroen and General Motors
Corporations. However PSA Peugeot Citroen has
According to Kevin Rose, Volkswagen's head ofended talks with Proton last week while
international sales, "both parties clearlyGeneral Motors is said to be still having
know what they would want from such anongoing discussions. Unfortunately, no
agreement." He also said that the company isdetails were released regarding the talks
also working to meet the deadline set by thebetween  GM  and  Proton.
Malaysian government which is scheduled on
March  31,  2007.Volkswagen  to  Control  Production
Volkswagen has already added capacity inAccording to the Wolfsburg-based automaker
China and will expand in India to boost salescontrolling of local production is the key
of its Jetta and Passat models in two of thestrategy to survive in emerging markets such
world's fastest growing major economies. Itas Malaysia and India. "For us a brand, it's
should be noted that just last Proton hasimportant that we can always say made by VW,
again reported its biggest quarterly loss inor built by VW. Even in China, where for
at least eight years and has been marketlegal reasons we are a minority partner, we
share to overseas rivals including Toyotastill have a great control over the
Motor Corp. Proton needs new design andproduction, assembly, design of our products,
technology in order to become competitive notand that's incredibly important for us,"
only in Malaysia but in the world and itexplained  Kevin  Rose.
needs Volkswagen to provide it with the help
that  it  needs  to  survive.It is no secret that initial talks between
Volkswagen and Proton have collapsed January
Ang Kok Heng, who manages 114 million stockslast year after the two companies disagreed
at Philip Capital Management in Kuala Lumpur,on issues pertaining to the control of the
said "there are a lot of things Proton needscompany. Fortunately, all issues have been
to learn in order to be competitive andsettled resulting to the resuming of talks
having a partner will help it catch up withbetween  the  two  automakers.
the  bigger  boys."
About  Proton
Despite the losses that Proton has obtained
it has managed to increase its shares by asMalaysia's government owns 43 percent stake
much as 3.1 percent and closed up 5 sen orat Proton held by its investment unit,
0.8 percent at 6.55 ringgit in Kuala Lumpur,Khazanah Nasional Bhd. It was Former Prime
valuing the company at 3.6 billion ringgit orMinister Mahathir Mohamad who set up Proton
$1 billion USD. However in terms of stocks,in the year 1983 and become the bedrock of
Proton's stocks have declined by 0.8 percentthe country's manufacturing industry. Former
this year while Malaysian benchmark index hasPrime Minister Mohamad said last year that
climbed  7.8  percent.Proton will collapse without a foreign
partner. It was in July 1985 that Proton
Proton is not the first Malaysian automakerlaunched its first model the Proton Saga
that has seek for a foreign partner, the Shahwhich became the country's most popular car
Alam, Malaysia-based automaker has soughtfor taxis.



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