Volkswagen scraps plan to work with Proton

FRANKFURT: Volkswagen (VW) has scrapped plans to cooperate with Proton Holdings Bhd to build and sell VW brand cars for the local market.
“We had a very specific idea how we wanted to proceed there. Unfortunately the Malaysian government, Khazanah and Proton had different ideas. Therefore, what we wanted in the cooperation with Proton will not materialise,” chief executive Bernd Pischetsrieder told investors gathered in Dearborn, Michigan, on Wednesday.
VW placed the presentation from a Lehman Brothers event on its investor relations website on Thursday.
In October 2004, the Wolfsburg-based carmaker said it had signed an agreement for a long-term strategic partnership with Proton that would help it enter the growing South-East Asian car markets without significant investments.
As a first step, VW and Proton agreed to assemble two VW models from knock-down kits with some of the parts to be procured locally to help build up the domestic auto industry.
The initial sales target given for 2006 was more than 15,000 units.
Although VW had then said it had no plans at the time to buy into the Malaysian carmaker, shares in Proton received substantial support due to repeated reports that VW had entered into negotiations to buy a stake in the company.
Pischetsrieder said during the presentation that while it was still in talks with Proton, there were no more benefits to be attained out of the partnership for Volkswagen.
“What we are investigating now is whether in a few isolated projects we can support Proton – and I'd like to put the emphasis on exactly that word, to support Proton, and not to have any joint programmes or joint ventures or so but to support Proton,” Pischetsrieder said.
Proton, of which Khazanah owns roughly 38%, could not be reached for comment. – Reuters