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Bloomberg: VW in talks with Proton, looks to grow regional presence

February 09, 2012

A Volkswagen employee works on a VW Passat at an assembly line in Emden April 24, 2009. — Reuters pic
NEW YORK, Feb 9 — German automotive giant Volkswagen is looking to gain a bigger foothold in ASEAN and is now in talks with local carmaker Proton for a possible manufacturing tie-up, a Bloomberg reported today quoting a source.

According to the report, Volkswagen’s renewed interest stems from the recent takeover of the national carmaker by Tan Sri Syed Mokhtar Albukhary’s DRB-HICOM last month.

Volkswagen already has an existing relationship with DRB-HICOM, having sealed an assembly deal for the Passat executive saloon here for re-export in 2010.

The unnamed source informed Bloomberg that the Wolfsburg firm is sending a team of senior officials to rate Proton’s existing assembly facilities for suitability as a production base from which the German carmaker will supply its ASEAN needs.

Proton has previously said that its Tanjung Malim plant has a theoretical million-car capacity.

Volkswagen has been expanding its global production aggressively, with ambitions of unseating US-based GM as the world’s largest carmaker. GM resumed top spot last year after a tsunami and earthquake in Japan crippled Toyota’s production line, forcing the Japanese firm to cede the position by default.

Proton and Volkswagen had previously been on the cusp of entering a technical and commercial partnership in 2007, but was forced to abandon the deal after a protracted year-long negotiation due to political concerns.

The ailing Malaysian carmaker was then said to be in need of a partner to help develop and bear the cost of new models needed to grow the company’s presence from beyond Malaysian shores and a select number of export destinations.

Despite Volkswagen meeting both criteria, Proton unexpectedly announced that it would go it alone.