Mitsu 380 export hope

A NEW technical alliance between Mitsubishi Motors Corporation (MMC) and Malaysian car manufacturer Proton could produce an export deal for the struggling Australian-built 380 sedan.

As rumours concerning the imminent closure of Mitsubishi’s Tonsley Park production plant swirl around Adelaide in the lead-up to this weekend’s SA state election – all of which have been vehemently denied by Mitsubishi Australia – GoAuto understands that the export deal is close to being signed and that shipments of the 380 could commence before the end of the year.

Mitsubishi Australia Kevin Taylor said a delegation of four Proton marketing and product engineers visited the plant this month on a fact-finding mission.

Four weeks ago Mitsubishi also sent a 380 sedan to Proton’s headquarters in Kuala Lumpur for assessment, which could see a Malaysian-specification 380 emerge that meets that country’s regulations and suits its climatic conditions.

The proposed export deal is part of the new memorandum of understanding signed between MMC and Proton last month, and Mitsubishi Australia is hopeful that the high-level involvement of its Japanese parent stands the proposed export deal in good stead.

A free-trade agreement being negotiated between Australian and Malaysia could also be good news for Mitsubishi in Adelaide.

"It’s good news from our point of view and I guess with MMC involved at their end too," said Mr Taylor.

He said it was "early days" in the deal and he was still unsure when exports would commence, in what volumes and what specifications.

Regardless, the deal would provide Mitsubishi with an important export market for the 380, which has struggled against the collective might of the Holden Commodore, Ford Falcon and Toyota Camry since its launch last October.

The company had initially forecast sales of 32,000 a year but this has been scaled back to 27,000 – or 2250 sales a month – for the first year amid growing concerns that the 380 is fighting an uphill battle for survival.

Last month just 1011 380s were sold, according to VFACTS industry figures.

The car is currently being discounted to $29,990 for a limited time and the company has been forced to suspend production for three weeks this month.

Proton and MMC revived their technical cooperation pact after the collapse of a planned strategic alliance with Volkswagen last month.

The pair is expected to share development costs and component suppliers, although this new development with the 380 could also mean that Mitsubishi furnishes Proton with a range of completely built-up vehicles.

The tie-up with Japan’s only unprofitable car-maker comes as Proton tries to lift its business after reporting losses last year due to a declining market share in Malaysia.

The 380 sedan would be a good fit for Proton, which is urgently in need of a large car to replace its ageing Perdana sedan (pictured above), itself based on an old Mitsubishi design and which for years has been mooted as a possible vehicle for Australia.

Proton had been negotiating with Rover to use its 75 medium-sized car before MG Rover collapsed last year.

Proton Cars Australia managing director John Startari said this week he was unable to elaborate on the MMC-Proton tie, nor the 380 export program, apart from what had already been stated.

A free-trade agreement between Australia and Malaysia was due to be in place by June, however, in its latest assessment the Department of Foreign Affairs and Trade (DFAT) said a mid-year conclusion to negotiations was unlikely.

According to DFAT: "Officials are developing a schedule of meetings which should complete negotiations in a reasonable timeframe."A clear FTA ruling on cars will be crucial to 380 exports as Malaysia currently has automotive import tariffs ranging from 80 per cent to 200 per cent based on engine capacity.

The 380’s 175kW/343Nm 3.8-litre V6 has a capacity of 3828cc, which could put it into a high tariff regime.

The MMC-Proton alliance falls short of the ambitious Volkswagen strategic partnership, which had been in negotiation for about 12 months.

The Proton-VW tie would have included building the Passat prestige car and Lupo light car at Proton’s Malaysian plants for South-East Asian markets, as well as providing marketing support for Proton exports.

Volkswagen pulled out of the alliance early this year after the Malaysian government, which owns 42 per cent of Proton through investment arm Khazanah Nasional, refused to allow the European auto giant to have a controlling stake.

Proton said at the time it had no plans to sell an equity stake to MMC, which was a main shareholder in Proton before selling its interest in 2004.

MMC originally helped provide technology to Proton when it was set up in 1983 and many of the Malaysian brand’s earlier cars were based on superseded Mitsubishis.

However, the relationship soured when Proton complained about the high cost of components and accusations that MMC was providing it with outdated technology.

Proton is struggling on its home turf. The national car-maker once held 60 per cent of the local market but this has tumbled to around 45 per cent as tariffs are reduced and foreign competitors, many of them Japanese and Korean, move into the market with better quality vehicles.