Pak Lah Says Proton In Talks With Volkswagen AG

Prime Minister Abdullah Ahmad Badawi has said troubled carmaker Proton and German giant Volkswagen AG are in negotiations, but declined to give details of the deal, according to a report. "I don't want to comment because it is being negotiated," Abdullah was quoted as saying in the New Straits Times.

Reports last week said Volkswagen had agreed to buy a controlling stake in Proton's manufacturing division -- news which sent Proton shares up 13.14 percent on Friday to 7.75 ringgit (2.21 dollars).

The government is under intense pressure to announce details of a partnership for loss-making Proton, which last year lost its status as Malaysia's biggest-selling carmaker to rival Perodua.

The deal with Volkswagen is aimed at providing Proton with the expertise it needs to arrest a sharp decline in market share as competition heats up.

Proton has been in talks with US auto giant General Motors, and PSA Peugeot Citroen of France, as well as Volkswagen, while three Malaysian automotive firms have also expressed interest in taking stakes in the company.

The Malaysian government owns 59 percent of Proton, including a 43 percent stake held by its investment arm Khazanah Nasional. It has said an announcement on a partnership deal will likely come in the first quarter of this year.

Proton's market share has fallen sharply in recent years due to the whittling away of duties that has made imports more affordable and a persistent reputation for poor quality and unimaginative models. (Channel Newsasia)
Proton: Image -Source
Volkswagen: Image - Source