Malaysian carmaker Proton said yesterday that Europe’s biggest automaker Volkswagen has scrapped alliance talks, a move expected to dent its attempts to conquer export markets.
Announcing the failure of the new round of talks, state-controlled Proton said Volkswagen would have been an “interesting” partner.
“During preliminary talks between the parties, Volkswagen confirmed that it currently has other priorities and that a potential collaboration with Proton could not be pursued,” it said in a statement.
COLLABORATION
In 2007, the two companies were close to a possible tie-up, but talks were brought to a sudden close in November 2007 when the Malaysian government said it was no longer seeking a foreign partner.
Proton has been searching for a collaborator in a bid to penetrate foreign markets and develop attractive models to compete with growing competition from Japanese, European and Korean carmakers in its domestic market.
Ahmad Maghfur Usman, an auto analyst at OSK Research, said that without a strategic partner Proton would find it difficult to find success in export markets and will continue to depend heavily on the domestic arena.
“Proton will be able to survive even if they do not find a partner by selling in the domestic market, but margins will be low and it could slip further behind their competitors like Hyundai,” he said.
PRODUCTION
Ahmad said that Proton’s total production for its March financial year was 184,000 units, with 86 percent sold in Malaysia, while its plant utilization was only 50 percent to 60 percent.
“A strategic alliance will allow Proton to optimize its low plant utilization,” he said.
Proton was formed in 1983 by then-Malaysian premier Mahathir Mohamad as part of an ambitious national industrialization plan.
However it has suffered from a reputation for unimaginative models and poor quality.
Proton’s net profit for the three months to the end of March stood at 22.8 million ringgit (US$6.87 million), compared with a loss of 323 million ringgit in the same period a year ago.>
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