05-03-2007: Peugeot ends partnership talks with Proton

PSA Peugeot-Citroen has decided not to proceed with a proposed partnership with Proton Holdings Bhd after evaluating the feasibility studies that were concluded in January, the French carmaker announced on March 5.

“An in-depth study of the automobile market and the economic conditions for co-producing vehicles with Proton concluded that the conditions for the project’s success were not present,” it said.

In a statement released via its website, Peugeot said it had “informed Proton of its decision not to follow up on the study”.

It said talks with Proton had centered on the development of Peugeot and Citroen in Malaysia and the use of the country as a production base for its sales operations in the Asean region.

Meanwhile, in an interview with a French daily published on March 5, Peugeot chief executive officer Christian Streiff said it had abandoned talks with Proton as the tie-up did not “guarantee the conditions of production at low cost”.

In the report by Le Figaro, Streiff also said the French carmaker would have to downsize its workforce as part of a restructuring plan that it was undertaking.

An industry analyst said Peugeot’s decision not to proceed with the proposed partnership was not a “massive blow for Proton”.

“Peugeot was only talking about joint development whereas GM (General Motors Corp) and VW (Volkswagen AG) are looking at taking some control of Proton’s operations,” he said.