Report: VW to Pass on Proton Yet Again

The long courtship between Malaysian national car maker Proton Holdings Bhd and Volkswagen AG reportedly has hit the rocks.

Malaysia’s The Star newspaper says an announcement promised by Proton Chairman Nadzmi Salleh on the results of the talks will be that there will be no partnership.

Nadzmi declined to provide further information at an earlier media financial briefing.

“We will make an announcement in due course, probably in one or two weeks’ time,” the Business Times quoted him as saying.

Proton and VW have been courting in an on-again, off-again romance since at least 2004.

Now, The Star says it has learned VW, which recently acquired a stake in Suzuki Motor Corp. and bought a controlling share of Porsche AG, prefers to concentrate on what it has on its plate.

“On Proton’s part, the understanding is that the company will continue to seek a strategic partnership with another party and is working on a backup plan,” the newspaper says.

“The cessation of talks would be a dampener for Proton, which has sought a partnership with VW but only to be thwarted on a number of other occasions for one reason or another.”

The newspaper quotes an unnamed analyst from a local bank-backed brokerage as saying it will be a “big blow” for Proton if a strategic alliance with VW does not materialize.

The Business Times reports Proton is looking to ramp up its partnership with China's Youngman Automobile Mfg. Co. Ltd.

“We have been in partnership with Youngman for more than two years and we understand better the China market now,” Proton Managing Director Zainal Tahir is quoted as saying. “We are looking to commit more resources to the market, which could come in the form of a JV (joint venture) or technical collaboration.

Zainal says Proton also is working to finalize and execute its partnerships in India and Iran as soon as possible

In a report to the Malaysian Stock Exchange, Proton says it posted a net profit of RM22.8 million ($6.8 million) in the quarter ended March 31, a sharp turnaround from a net loss of RM322.97 million ($97.4 million) a year earlier.

The company credits higher sales of its three core models, the Persona, Saga and Exora.

Zainal says he expects the car maker to see better sales this year as market sentiments and consumer confidence improve.

“We will be pushing for higher domestic and export sales this year, driven by the three core models, as well as the introduction of a new sedan in October or November and the variants to the Persona model,” he says.