No Takers For Proton?

With the March-end deadline for naming a strategic partner for national carmaker Proton a day away and the search obviously not about to yield anything positive, the statement attributed to the Second Finance Minister Tan Sri Nor Mohamed Yakcop by Bernama, that the government is still 'evaluating options' to find a strategic partner, needs to be taken with a pinch of salt.

Tan Sri Nor Mohamed made no reference to a newsreport that German carmaker Volkswagen (VW) has scrapped plans for a tie-up with Proton, although at least one blog states that the Volkswagen-Proton talks are still on. Peugeot Citroen PSA had earlier pulled out of a possible deal with the ailing Proton.

Among those said to be still interested for the stake, include General Motors, DRB-Hicom and the Naza Group.

The increasingly competitive and cutthroat domestic car market has taken a toll on Proton, which for years had thrived in a protected environment — high taxes on foreign cars that forced ordinary Malaysians to buy Proton cars despite their inferior quality.

But in recent years the taxes have been lowered in line with a regional trade agreement, and Malaysians have made a beeline for imported vehicles.

Malaysia is Southeast Asia's biggest new car market, with about half a million units sold each year.

At midday, Proton shares were down 3.8 percent at 6.40 ringgit, after falling as low as 6.20 ringgit, in reaction to The Straits Times report.

Since the beginning of this decade, Proton's share of the domestic market has almost halved to 32 percent, from nearly 60 percent. By the close of the quarter ended Sept. 30, 2006, sales had fallen 29 percent on year.

For the quarter ended Dec. 31, 2006, Proton reported a net loss of 281.5 million ringgit (€US80 million; €61 million), from a net profit of 86.5 million ringgit a year earlier.

Given this scenario one should be forgiven for thinking that in fact there are no serious, viable takers for Proton. Will someone in the know please enlighten those of us who are not well-versed with the goings-on. (Source - Bernama, International Herald Tribune)
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Update 4/2/07: PM To Meet Volkswagen Chief On Tie-up With Proton