Malaysian Proton to gear up a deal with Volkswagen

Kuala Lumpur, Malaysia | August 03, 2007 by D-8 Secretariat

Shares of Malaysian car manufacturer Proton increased slightly on Monday after a report said that it was one step closer to a deal with German auto giant Volkswagen.

Analyst said this positive news along with a plan by the government to scrap cars 15 years and older on a voluntary basis renewed investors interest in the company.

"Malaysian representatives of Proton's stakeholders have inched closer to a final deal with Volkswagen," the Edge business newspaper said end July.

Proton and Volkswagen met for a third time in Germany recently after previous talks in Thailand and the United States.

A strategic tie-up for Proton is crucial as it needs foreign technical expertise to stem a sharp decline in market share and cut losses.

The Edge said among the new areas that have been agreed are that Proton will control its domestic distribution network while Volkswagen will look after international distribution.

According to the Edge business newspaper, Volkswagen will invest "a few hundred million ringgit," to jump-start the new company.

State investment arm Khazanah Nasional is the controlling shareholder in Proton, with a 42.74 percent stake. State pension fund EPF and national oil firm Petronas own 12.07 percent and 8.84 percent respectively.

Analysts also attributed the rise in Proton shares after the government approved a programme to scrap old cars. The Edge said that the plan was aimed to boost Proton's sales.

"It has been decided that those who voluntarily scrap their cars will be offered a subsidy to buy a new Proton car," it said, adding that "the subsidy will be on a scale with a maximum of 5,000 ringgit."

Turkey and Malaysia are two countries that manufactures and exports cars significantly recently. Automotive industry in fact is one important industry within D-8 countries, and discussed during Working Group on Industry in Kuala Lumpur, Malaysia, last May 2007. D-8 Secretariat expects the detail of cooperation of automotive industry within the member states will be further discussed in the next WG on Industry in Indonesia.

To read related news please click here.

Read Also

• Malaysia’s Proton plans to Produce Electric Car End of 2009 Using Lithium Ion Batteries
• Malaysia’s Proton plans to produce electric car end of 2009 using lithium ion batteries
• Turkey ranks 29th in machinery exports
• Indonesian Private and State Sectors to Gear Up on Biodiesel and Palm Oil
• Deal of Two D-8 Member States: Iran-Malaysia Signed $6 Billion Gas Deal
• Iran and Turkey take a giant step in Key European gas Deal
• Egypt and Turkey plan on Gas Business Deal
• INTEL, Egypt Sign Deal for Motherboards Factory
• Iran starts exporting cars to Turkey
• Bangladesh signs deal with World Bank on development support credit