Proton Needs Volkswagen to Survive

In the news: Europe's largest automaker andthe partnership didn't last long and ended in 2004.
producer of Volkswagen relay said that itsThere are two other automakers that are
ongoing talks with Malaysia's Proton Holdings Bhddiscussing the possibilities of partnership with
are already at its advanced stage since it is reallyProton, the PSA Peugeot Citroen and General
planning to seek a platform to expand its marketMotors Corporations. However PSA Peugeot
in Southeast Asia.Citroen has ended talks with Proton last week
According to Kevin Rose, Volkswagen's head ofwhile General Motors is said to be still having
international sales, "both parties clearly know whatongoing discussions. Unfortunately, no details were
they would want from such an agreement." Hereleased regarding the talks between GM and
also said that the company is also working toProton.
meet the deadline set by the MalaysianVolkswagen to Control Production
government which is scheduled on March 31, 2007.According to the Wolfsburg-based automaker
Volkswagen has already added capacity in Chinacontrolling of local production is the key strategy
and will expand in India to boost sales of its Jettato survive in emerging markets such as Malaysia
and Passat models in two of the world's fastestand India. "For us a brand, it's important that we
growing major economies. It should be noted thatcan always say made by VW, or built by VW.
just last Proton has again reported its biggestEven in China, where for legal reasons we are a
quarterly loss in at least eight years and has beenminority partner, we still have a great control
market share to overseas rivals including Toyotaover the production, assembly, design of our
Motor Corp. Proton needs new design andproducts, and that's incredibly important for us,"
technology in order to become competitive notexplained Kevin Rose.
only in Malaysia but in the world and it needsIt is no secret that initial talks between
Volkswagen to provide it with the help that itVolkswagen and Proton have collapsed January
needs to survive.last year after the two companies disagreed on
Ang Kok Heng, who manages 114 million stocks atissues pertaining to the control of the company.
Philip Capital Management in Kuala Lumpur, saidFortunately, all issues have been settled resulting
"there are a lot of things Proton needs to learn into the resuming of talks between the two
order to be competitive and having a partner willautomakers.
help it catch up with the bigger boys."About Proton
Despite the losses that Proton has obtained it hasMalaysia's government owns 43 percent stake at
managed to increase its shares by as much as 3.1Proton held by its investment unit, Khazanah
percent and closed up 5 sen or 0.8 percent atNasional Bhd. It was Former Prime Minister
6.55 ringgit in Kuala Lumpur, valuing the companyMahathir Mohamad who set up Proton in the year
at 3.6 billion ringgit or $1 billion USD. However in1983 and become the bedrock of the country's
terms of stocks, Proton's stocks have declined bymanufacturing industry. Former Prime Minister
0.8 percent this year while Malaysian benchmarkMohamad said last year that Proton will collapse
index has climbed 7.8 percent.without a foreign partner. It was in July 1985 that
Proton is not the first Malaysian automaker thatProton launched its first model the Proton Saga
has seek for a foreign partner, the Shah Alam,which became the country's most popular car for
Malaysia-based automaker has sought foreigntaxis.
alliance with Mitsubishi Motors Corp. unfortunately