Reuters - Friday, September 7
Volkswagen to deepen government talks on Proton
"The talks with the main shareholder (state investment arm Khazanah) - FRANKFURT, Sept 7 - Germany's Volkswagen , the world's fourth-largest carmaker, has arranged high-level talks in coming weeks on further steps towards linking up with Malaysian carmaker Proton .
"The talks with the main shareholder (state investment arm Khazanah) and the Malaysian government will now be further intensified, in order to examine the possibilities of either a cooperation or taking a stake in Proton," VW said on Friday.
Volkswagen has long been interested in strengthening its position in Southeast Asia and first agreed to a "long-term" strategic partnership with Proton in October 2004, only to say in January 2006 that it had scrapped the plans after Malaysia ruled out VW taking control of Proton.
The loss-making Malaysian carmaker, set up in 1983 by former Prime Minister Mahathir Mohamad, was for a long time state-protected due to affirmative action policies aimed at giving the country's ethnic Malays business and employment, and it sold at one point more than half of all new cars in Malaysia.
But ever 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.