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    Volkswagen now in talks with DRB-Hicom and Proton to take over some manufacturing capacity at Tanjung Malim and make Malaysia as its regional hub.VW also will help Proton to make the brand more globally competitive through its engineeering network. Read full news from BTimes and Bloomberg below.


    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.


    Previous news from Business Times – Feb 3


    KUALA LUMPUR Feb 3 — German car maker Volkswagen, VW is in talks with DRB-Hicom to take over some manufacturing capacity at Proton’s modern but underused plant in Tanjung Malim Perak and make Malaysia its regional production hub.

    In return it would help the local car manufacturer which recently bought a controlling stake in Proton Holdings Bhd Proton make the brand more globally competitive through its engineering network and experience in emerging fast-growing markets such as China and Brazil according to the Wall Street Journal (WSJ).

    The international daily reported yesterday that several high-ranking VW executives from Germany had travelled here to talk directly with DRB-Hicom on how the two car makers could expand their business relationship.

    “Volkswagen is constantly looking for growth opportunities worldwide ” WSJ quoted a VW spokesman as saying No decision had been taken on its potential regional growth here he added.

    DRB-Hicom group managing director Datuk Seri Mohamad Khamil Jamil was last month reported as saying that the company was in “exploratory talks” with several partners for a tie-in involving Proton.

    His comments came after Khazanah Nasional announced it was selling its 43 per cent share in the national car maker to DRB-Hicom for about RM1.3 billion.

    VW is the world’s second-largest car maker after the US-based General Motors, and has been in talks with Malaysian tycoon Tan Sri Mokhtar al-Bukhary’s motor group for several years, but their proposals never really took off, the paper said.

    WSJ noted a 2010 agreement between VW and DRB-Hicom to assemble cars in Malaysia but added that DRB-Hicom also assembled and distributed vehicles for Daimler AG’s Mercedes-Benz and Japanese-owned motors Honda Isuzu and Suzuki.

    Proton, the newspaper said had lost its dominant control in Malaysia lately owing to increasing competition at home

    It further noted that Malaysia had lowered some import barriers mandated by a Southeast Asian free-trade deal paving the way for foreign manufacturers to enter one of the region’s largest car markets.

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