Wednesday October 31, 2012
Will Proton be also pursuing a collaboration with VW now?
By SHARIDAN M. ALI and CHOONG EN HAN
PETALING JAYA: Now that Honda Motor Co Ltd has become a potential foreign strategic partner for Proton Holdings Bhd, industry observers are wondering if the latter will continue to pursue a tie-up with Volkswagen (VW) AG, Europe's biggest carmaker.
The question arose because VW has been “courting” Proton for many years and has been considered the best turnaround bet for the wholly-owned subsidiary of DRB-Hicom Bhd.
Also, Proton will be keeping its doors open to work with other partners as the initial collaboration with Honda is non-exclusive and exploratory in nature.
The “courtship” between the Malaysian and German automotive giants, which has received much public attention, was getting serious at one point amid talks about VW acquiring a strategic stake in Proton.
However, the negotiations collapsed in 2007 after the Government stepped in to stop the proposal that could have turned Proton into a new entity. Speculation of a merger has been rife since 2004.
Proton's then-group managing director Datuk Seri Syed Zainal Abidin Syed Mohamed Tahir, was quoted as saying two years ago that VW and Proton were exploring a collaboration. However, it would probably be confined to VW using Proton's manufacturing capacity in Tanjung Malim to produce some car models, he said.
A source close to DRB-Hicom told StarBiz that Proton was looking for a long-term win-win collaboration with a global original equipment manufacturer. “And the agreement with Honda is on a non-exclusive basis,” he said, hinting that Proton's doors were still open.
VW relationship with Proton involved an assembly joint venture of VW completely-knocked-down Passat at DRB-Hicom plant in Pekan. DRB-Hicom expected further gains when more VW cars such as the Jetta and Polo were assembled at Pekan for the regional export markets.
An industry observer said there could be a potential collaboration between Proton and VW but it would probably be on a project basis.
A sources added: “VW is most likely not in the game anymore with Proton due to sheer exasperation. VW has moved on to other things.”
CIMB Research analyst Lucius Chong said Proton's strategic collaboration with Honda was surprising as he believed that DRB-Hicom was leaning towards VW since the two companies already had an assembly JV in place at DRB-Hicom's plant. “However, we have received confirmation from management that the Honda agreement is non-exclusive and Proton will be free to work with any other partner in the future.”
He added that the collaboration could be non-exclusive now but there could be some elements of exclusivity at a later stage.
“But, at this point of time, anything is possible and VW can also jump onto the bandwagon,” he said.
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