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VW pullout pushes Proton forward

On the line: Proton says it is now better-placed to negotiate its future.

New negotiations – led by Mitsubishi – mean a partner for Proton is still likely

6 Dec 2007

MALAYSIAN car-maker Proton has announced that it can now move forward in the wake of the dissolution of talks with German carmaker Volkswagen AG.

Speaking at the Australian media preview of the Persona sedan in Kuala Lumpur last week, the company’s director of manufacturing – Datuk Kamarulzaman Darus – was upbeat about Proton’s future.

“It is good news from Proton’s perspective,” he declared.

“We can now move forward. Not only for our people, but also our suppliers. It gives us clarity.” Proton and Volkswagen ended months of negotiations in late November following a disagreement of how much equity Volkswagen would have in the Malaysian car-maker.

Speculation suggests that, as Proton saw it, the Germans wanted too much control of the organisation that was devised 22 years ago to help foster a vehicle manufacturing industry and engineering know-how for the people of Malaysia.

Datuk Darus also added that, should Proton commence talks with other manufacturers on possible alliances and synergies in the future, the negotiations with Volkswagen will give it valuable experience in helping Proton get what it wants.

“(Now) when Proton negotiates with potential partners it is on a better footing,” he proclaimed.

In fact, Proton is already deep in talks with another manufacturer, as it seeks a technical liaison in order to move its future product portfolio forward.

Wanting to quell speculation regarding any particular car-maker (in recent years General Motors, Peugeot, Mitsubishi and Volkswagen have all been linked with Proton), Datuk Darus said that it could be with any number of potential suitors.

 center imageLeft: Proton Persona.

“(They could be) not only from Germany but also Japan,” was his enigmatic remark on the matter.

However, nobody within Proton was prepared to disclose the identity of which ones are now in talks with the Malaysians.

Speculation suggests that Mitsubishi is the frontrunner, and the most likely party. Many observes believes that history is on this union’s side, as Proton began its operations in 1985 by building contemporary Mitsubishi-based products under license – and still does in the guise of the Saga, which is based on the early-1980s Lancer.

However, the timing of any announcement is anybody’s guess. Certainly the Malaysians are not saying and nor is Proton Cars Australia managing director John Startari.

“Senior management are still getting briefed by the (Malaysian) government, and they are not able to talk about the dealings,” said Mr Startari.

GoAuto understands that gaining a suitable range of diesel engines from a partner, for greater export market infiltration, is very much a top priority for Proton.

It was one of the primary driving forces behind a potential tie-up with Volkswagen.

Proton is hoping that some recent good news on the home market front – where its share was up to 40 per cent in September following a steady decline that saw that figure plunge to 25 per cent in May after the Malaysian car market became more open to outside competition – will help with the negotiation process and boost company morale.

A return to a (modest) profit in the third quarter after big losses over the same period last year has further fuelled Proton’s optimism.

Calling it a turnaround, Proton points to a positive consumer reception for its new Persona as the main reason behind the bounce-back.

A further sales surge is anticipated when the replacement for the long-running Saga entry-level family car – a four-door sedan derived off the Savvy hatchback platform – is launched in Malaysia in early 2008, with export markets to follow soon after.

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