13-09-2007: VW aims to take 20% stake in Proton
FRANKFURT: Volkswagen AG (VW) wants to take a 20% stake in carmaker Proton and could increase its share to a majority, a person familiar with the situation said yesterday.
Wolfsburg-based VW, the world’s fourth-largest carmaker, plans to propose the move to the Malaysian government, the source told Reuters at the Frankfurt International Motor Show yesterday.
The idea is for the Malaysian government to gradually pull out while taking on any losses during the starting phase, the source said, adding that the VW stake could be increased to 50% within five years.
The German carmaker has long been interested in strengthening its position in Southeast Asia. Last week, it said it had arranged high-level talks in the coming weeks on further steps towards linking up with Proton.
Proton, which faces a shrinking market share in an increasingly competitive domestic market, wants to tie up with a global carmaker to boost its sales and turn itself around.
It expects to return to profit this financial year, helped by the launch of a new car that will replace its most successful model, the 14-year-old Wira sedan.
Proton, set up in 1983 by former prime minister Tun Dr Mahathir Mohamad, at one point sold more than half of all new cars in Malaysia.
But since barriers to competition started coming down, Proton has lost market share, not just to international rivals but also to domestic carmaker Perodua.
Last November, the government announced it had decided to consider giving approval for VW to take a controlling stake in Proton’s manufacturing operations.
The Malaysian government has also held talks with VW rivals PSA Peugeot Citroen of France and General Motors of the United States.
Wolfsburg-based VW, the world’s fourth-largest carmaker, plans to propose the move to the Malaysian government, the source told Reuters at the Frankfurt International Motor Show yesterday.
The idea is for the Malaysian government to gradually pull out while taking on any losses during the starting phase, the source said, adding that the VW stake could be increased to 50% within five years.
The German carmaker has long been interested in strengthening its position in Southeast Asia. Last week, it said it had arranged high-level talks in the coming weeks on further steps towards linking up with Proton.
Proton, which faces a shrinking market share in an increasingly competitive domestic market, wants to tie up with a global carmaker to boost its sales and turn itself around.
It expects to return to profit this financial year, helped by the launch of a new car that will replace its most successful model, the 14-year-old Wira sedan.
Proton, set up in 1983 by former prime minister Tun Dr Mahathir Mohamad, at one point sold more than half of all new cars in Malaysia.
But since barriers to competition started coming down, Proton has lost market share, not just to international rivals but also to domestic carmaker Perodua.
Last November, the government announced it had decided to consider giving approval for VW to take a controlling stake in Proton’s manufacturing operations.
The Malaysian government has also held talks with VW rivals PSA Peugeot Citroen of France and General Motors of the United States.
posted by SEE FU at 12:18 PM
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