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Proton Needs Volkswagen to Survive

In the news: Europe's largest automakerwith Mitsubishi Motors Corp.
and producer of Volkswagen relay saidunfortunately the partnership didn't
that its ongoing talks with Malaysia'slast long and ended in 2004. There are
Proton Holdings Bhd are already at itstwo other automakers that are discussing
advanced stage since it is reallythe possibilities of partnership with
planning to seek a platform to expandProton, the PSA Peugeot Citroen and
its market in Southeast Asia.General Motors Corporations. However PSA
According to Kevin Rose, Volkswagen'sPeugeot Citroen has ended talks with
head of international sales, "bothProton last week while General Motors is
parties clearly know what they wouldsaid to be still having ongoing
want from such an agreement." He alsodiscussions. Unfortunately, no details
said that the company is also working towere released regarding the talks
meet the deadline set by the Malaysianbetween GM and Proton.
government which is scheduled on MarchVolkswagen to Control Production
31, 2007.According to the Wolfsburg-based
Volkswagen has already added capacity inautomaker controlling of local
China and will expand in India to boostproduction is the key strategy to
sales of its Jetta and Passat models insurvive in emerging markets such as
two of the world's fastest growing majorMalaysia and India. "For us a brand,
economies. It should be noted that justit's important that we can always say
last Proton has again reported itsmade by VW, or built by VW. Even in
biggest quarterly loss in at least eightChina, where for legal reasons we are a
years and has been market share tominority partner, we still have a great
overseas rivals including Toyota Motorcontrol over the production, assembly,
Corp. Proton needs new design anddesign of our products, and that's
technology in order to becomeincredibly important for us," explained
competitive not only in Malaysia but inKevin Rose.
the world and it needs Volkswagen toIt is no secret that initial talks
provide it with the help that it needsbetween Volkswagen and Proton have
to survive.collapsed January last year after the
Ang Kok Heng, who manages 114 milliontwo companies disagreed on issues
stocks at Philip Capital Management inpertaining to the control of the
Kuala Lumpur, said "there are a lot ofcompany. Fortunately, all issues have
things Proton needs to learn in order tobeen settled resulting to the resuming
be competitive and having a partner willof talks between the two automakers.
help it catch up with the bigger boys."About Proton
Despite the losses that Proton hasMalaysia's government owns 43 percent
obtained it has managed to increase itsstake at Proton held by its investment
shares by as much as 3.1 percent andunit, Khazanah Nasional Bhd. It was
closed up 5 sen or 0.8 percent at 6.55Former Prime Minister Mahathir Mohamad
ringgit in Kuala Lumpur, valuing thewho set up Proton in the year 1983 and
company at 3.6 billion ringgit or $1become the bedrock of the country's
billion USD. However in terms of stocks,manufacturing industry. Former Prime
Proton's stocks have declined by 0.8Minister Mohamad said last year that
percent this year while MalaysianProton will collapse without a foreign
benchmark index has climbed 7.8 percent.partner. It was in July 1985 that Proton
Proton is not the first Malaysianlaunched its first model the Proton Saga
automaker that has seek for a foreignwhich became the country's most popular
partner, the Shah Alam, Malaysia-basedcar for taxis.
automaker has sought foreign alliance



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