Proton and VW part ways

THE on-again off-again relationship between Malaysia's national car-maker Proton and Europe's largest vehicle manufacturer Volkswagen is now definitely off following the severing of talks about an alliance between the two car giants.

Malaysia's state investment arm Khazanah Nasional, which controls Proton, said it had discontinued negotiations with Volkswagen this week, confirming that for the time being it had decided to "shelve joint talks with VW about the alliance".

The Malaysian government also said it had ended talks with General Motors, citing an improvement in Proton's domestic sales and exports as part of the decision to halt negotiations.

"The government is of the view that Proton's management should be allowed to continue with its plans to further strengthen the company," said the statement.

For its part, Volkswagen also issued a similar statement on Tuesday, but stressed it remains focussed on developing strategic partnerships in the ASEAN region.

"Irrespective of this decision, Volkswagen will be stepping up its efforts to review other possibilities for actively engaging in the ASEAN region and further intensifying its sales activities in the region, including such activities in Malaysia," said the Volkswagen statement.

"The company remains committed to its plans to establish a sustainable and successful production and sales basis in the South East Asia region."Discussions between Proton Holdings Bhd and Volkswagen Aktiengesellschaft began in October 2004 to form a strategic alliance in which Proton gained better access to new automotive technologies and higher quality standards while Volkswagen gained a presence in the ASEAN region.