Mitsubishi to form new tie-up with Proton??

Mitsubishi to form new tie-up with Proton: report

Feb 2, 06 5:29am

Struggling Japanese automaker Mitsubishi Motors will form a new tie-up with Proton that would help the embattled Malaysian carmaker develop new models.

Technology transfer
Agreement to be inked tomorrow!

More news on 3rd of Feb: The star
http://biz.thestar.com.my/news/story.asp?file=/2006/2/3/business/13289749&sec=business

Proton, Mitsubishi form new tie-up
By B.K. SIDHU


PETALING JAYA: Proton Holdings Bhd's courtship with its “first love” – Japanese vehicle maker Mitsubishi Motors Corp – is set to end in yet another agreement that is expected to be signed this afternoon.
The deal ends months of speculation that the old partners were in talks. It also puts to rest Proton’s troubles in having to find an international partner to face the challenges of a liberalised domestic motor market.
A source close to the talks said that “this time around, it (the agreement) comes with a lot more extras’’ but a report from Japan said there was no likelihood of an equity participation.
The partnership with Mitsubishi, a former shareholder that helped Proton make its first cars two decades ago, would be restricted to technology and would not involve an equity stake, Proton's new managing director Syed Zainal Abidin Syed Tahir was quoted by Reuters as saying yesterday.
“Proton being small, I don't see any reason why it should not be collaborating. That's the journey that we like to go,” he said.
Zainal said Proton was also seeking alliances in China and India to build cars in these vast markets.
“These two markets we can't ignore. China we have tried. It's being relooked at. We have identified several parties in China,” he said.
“In India, we will start talking to several parties. In fact, they have approached us,” he added.
Zainal declined to name any of them.
Proton shares were last traded at RM5.35, down 31% over the past three months. “The general perception is that we have lost our direction. We have not lost our direction. We are clear,” Zainal said, adding the share price should be about RM7–RM8.
Mitsubishi held a 16% stake in Proton for nearly two decades but sold its shares in the national carmaker in 2004. While institutional investors took up part of the Mitsubishi block, Khazanah Nasional Bhd ended with almost half the stake and is today Proton's largest shareholder.
The re-entry of Mitsubishi – Japan’s only loss-making major vehicle maker – comes after German carmaker Volkswagen AG (VW) decided against taking up an equity stake in Proton.
An Asahi Shimbun report, quoting sources, said the tie-up between Proton and Mitsubishi would include transfer of technology, mutual supply of auto parts including engines, and allow Proton to create new models. It said the deal would pave the way the for production of Mitsubishi vehicles at Proton plants.
Such an arrangement would make it easier for Zainal to narrow the excess capacity at the carmaker's plants. He told the media last week that the plants were under-utilised and more was needed be done to fill the capacity.
An analyst said the renewed ties between Proton and Mitsubishi appeared positive.
“It is better than not having a partner, even though it is the same old partner. But I doubt if the Japanese company would share a lot of its technology when there is no equity participation this time around,’’ he said.
He said Proton needed a foreign partner to keep its market share stable.
“Proton is not able to design cars that are competitive against other models and I do not expect it to keep its market share stable for long.
“They need a foreign partner that can assist them in designing a new car,’’ he said, adding that even though motor vehicle sales rose 13% to 551,042 units last year, the industry has forecast a slower growth rate of 3% to 565,000 units this year. This would mean competitive designs are a must.
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More: NST
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Proton to revive ties with Mitsubishi
By ZURAIMI ABDULLAH


February 3 2006
PROTON Holdings Bhd will rekindle a technical alliance with Mitsubishi Motors Corp, a year after severing such ties that had lasted for 19 years.
Proton and Mitsubishi Motors, which used to have a 7.9 per cent stake in the national carmaker, is due to sign an initial pact today to develop motor vehicles and procure parts.
Proton managing director Syed Zainal Abidin Mohd Tahir said the national carmaker is also talking with several parties in China on possible collaborations in the production and distribution of vehicles.
Talks will soon begin with several parties in India on similar tie-ups, he told reporters in Shah Alam yesterday.
Syed Zainal added that China and India should feature more in Proton's future business, complementing its traditional overseas markets of South-East Asia, West Asia, the UK and Australia.
He dismissed any notion about selling off its British sports car outfit, Lotus group, but hinted that its bicycle business could be hived off as Proton realigns itself. "We will keep Lotus. I don't think we are using it enough," he added.
Syed Zainal said the alliance with Mitsubishi Motors would not involve equity sale.
He added that details of the partnership would be unveiled at the signing of a memorandum of understanding, which will be witnessed by International Trade and Industry Minister Datuk Seri Rafidah Aziz.
Syed Zainal said tie-ups with reputable global carmakers such as Mitsubishi Motors are part of Proton's initiatives to be cost-effective, offer better quality products and have a wider range of offerings that appeal to a broader market.
"We are revisiting our relationship with Mitsubishi Motors and want to enhance it. The Mitsubishi name is still strong despite some difficulties (faced by the carmaker) before. They have become much stronger today," he said.
Insiders said Proton will almost likely assemble some Mitsubishi models not already available in the Malaysian market for sale locally and in the region.
Some analysts, however, are not excited about this prospect and the whole tie-up in general.
"It will be a step backwards for Proton if it does the assembly of Mitsubishi cars again," one analyst said.
He added that the news on the tie-up seems to be a quick measure to address the recent slide of Proton share price.
Mitsubishi Motors was one of the founding members of Proton and a major shareholder until its own financial difficulties forced it to sell off its 7.9 per cent stake in early 2004. It still supplies car parts to Proton.
The Japanese carmaker had also played a big part in helping Proton to develop the country's first indigenous engine, the Campro.
Mitsubishi Motors had disposed of its entire stake in Proton via private placement.
Besides Mitsubishi Motors, Mitsubishi Corp had also disposed of its 7.94 per cent stake in Proton early last year. The stakes held by Mitsubishi Corp and Mitsubishi Motors were bought over by Khazanah Nasional Bhd.