The Truth About Cars » Proton http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Tue, 29 Jul 2014 21:42:50 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars editors@ttac.com editors@ttac.com (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » Proton http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com VW Budget Brand Hitting Budget Wall, Still Under Consideration http://www.thetruthaboutcars.com/2014/03/vw-budget-brand-hitting-budget-wall-still-under-consideration/ http://www.thetruthaboutcars.com/2014/03/vw-budget-brand-hitting-budget-wall-still-under-consideration/#comments Mon, 03 Mar 2014 14:47:21 +0000 http://www.thetruthaboutcars.com/?p=760145 2013 Volkswagen Up

In 2012, Volkswagen began research into starting a budget brand in the vein of Datsun and intended rival Dacia, with the aim of having a full lineup ready for sale by 2015. Two years later, the budget brand has hit a budget wall, and that’s only the start.

Autoblog and Autocar report VW is having issues hitting safety and quality targets while maintaining the low-cost pricing — aimed between 6,000 and 8,000 euro; the Up above begins at nearly 10,000 euro — the automaker expects for the unnamed budget brand.

Though no business case has been found thus far, VW’s project is still under consideration as technicians pour over how similar rivals — including one-time partner Suzuki and considered partner Proton — are able to build low-cost vehicles without compromising on quality or price. Even though Renault-Nissan manages to be profitable with Dacia, VW is concerned that a low-cost car would erode their own margins.

Last year, Volkswagen announced they would work in a joint venture with Chinese automaker FAW to bring a budget vehicle to China by 2016; cost issues are affecting this effort, as well.

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Let The Lotus Deathwatch Begin. Or Shall We Simply Pull The Plug? http://www.thetruthaboutcars.com/2013/01/let-the-lotus-deathwatch-begin-or-shall-we-just-pull-the-plug/ http://www.thetruthaboutcars.com/2013/01/let-the-lotus-deathwatch-begin-or-shall-we-just-pull-the-plug/#comments Tue, 15 Jan 2013 14:29:04 +0000 http://www.thetruthaboutcars.com/?p=473867

The Paris Five. All aborted

Another inspiration for wet dreams of easily impressed juvenile car bloggers is dying, is bleeding to death and has a “do not resuscitate” note nailed to the head.  Lotus has been given up for dead.

Blogs from autoevolution all the way to our sister pub Autoguide reprint the happy PR fluff that Lotus wants to “boost sales five times by 2015.” With sales crawling along at homeopathetic 1,043 units allegedly produced in 2012, making 5,000 by 2015 doesn’t sound like such a big deal. Trust me, it is if you want to sell them also. By 2015, the Lotus cars will still be sitting on technology that is ripe for the museum, and there is no relief in sight. Only poor car bloggers would be a target group ripe for a 20 year old Lotus – if sold used, preferably with a salvage title.

Paultan.org is a blog that has boots and ears on the ground in Kuala Lumpur, and it actually goes to press conferences given by Lotus owner DRB-Hicom. Paul Tan reports that if you’ve been waiting for the new Lotus Esprit or Elan, or any of the five Lotus concepts that had been shown 2010 Paris motor show (yes, that far back) you need to abandon all hope. They won’t happen, DRB-Hicom group Managing Director Datuk Seri Mohd Khamil Jamil told the press in KL. And by the way, plans had been cancelled even before the DRB-Hicom acquired Proton. As in: Forget about it. We never meant it.

Says Paul Tan: “The ‘Paris five’ were the Esprit, Elan, Eterne, Elite and the new Elise, which was supposed to replace the current one.”  No replacement für Elise, sorry.

Mohd Khamil told the press that Lotus must soldier on with the already ancient metal. “They may be old, but they remain good cars and there is still demand for them,” Mohd Khamil said. What else would you say in his shoes?

Khamil held out the possibility of a new Exige and Evora for after 2015, an announcement nobody can take really seriously. Development takes money, and there is none. A $434 million loan from six financial institutions has been used up, Khamil said.

Monday press conference: All peachy in non-car sectors

There is little chance for fresh funds:

Lotus may be famous for its cars, but the most memorable achievement was “making losses for the past 15 years,” as the Business Times reports from Kuala Lumpur. This achievement was crowned by a “record loss” of $185 million last year, as the Times of London wrote over the weekend.  The report comes with the good news that “Lotus breached banking covenants on a £270m financing facility. Last January lenders froze funding to the firm.”  Ouch.

At the weekend press conference Mohd Khamil said that the brand is not for sale. A few companies had looked into buying Lotus, or even all of Proton, but they didn’t like what they saw. Rumors that Volkswagen might be interested in buying Proton are floated with regularity in KL, as late as a few days ago, totally unfazed by prior firm statements by Volkswagen’s labor chief and vice chairman of Volkswagen’s supervisory board, Bernd Osterloh, that Proton won’t be bought. Volkswagen has an existing joint venture with Proton, and sees no reason to change that. When Osterloh talks, Volkswagen listens.

The buzz in Malaysia is that DRB-Hicom is stuck with Proton and Lotus which it took over as a favor to Malaysian politicians. In Malaysia, the government likes to “encourage” government-dependent companies to take failures off the government’s hands.  Loss-making companies get passed around to companies who can’t refuse, and get financing from equally hapless government banks or pension funds or state companies.

My contacts in Kuala Lumpur think that DRB-Hicom has agreed to keep Proton alive in exchange for favors from the government. DRB-Hicom is a Malay conglomerate, involved in everything from the Kuala Lumpur Airport, over arms production, all the way to waste management.  DRB-Hicom must remain in the government’s good graces. The question is how long it will be able to tolerate pain and bleeding.

At another press conference yesterday, DRB-Hicom sung the praises of its other sectors, namely services, property, assets and construction, while valiantly holding out the failed prospect of turning Malaysia into an automotive powerhouse. It didn’t work before, and it will work even less in the future. Car producing neighbors Thailand and Indonesia are pressuring Malaysia to remove trade barriers as promised when they signed the ASEAN Free Trade Agreement. Malaysia has sabotaged this as much as it can, but it can’t stop the ASEAN FTA from making Proton less and less competitive, and a takeover target nobody wants and needs.

All of this however never enters a budding car blogger’s wet dreams. That’s good, the young folks should not suffer nightmares at an early age.

 

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Saab Outselling Lotus Nearly 2:1 In UK http://www.thetruthaboutcars.com/2012/11/saab-outselling-lotus-nearly-21-in-uk/ http://www.thetruthaboutcars.com/2012/11/saab-outselling-lotus-nearly-21-in-uk/#comments Tue, 06 Nov 2012 17:42:47 +0000 http://www.thetruthaboutcars.com/?p=466084

Timothy Cain’s sales numbers for the UK provide a pretty sobering snapshot of Lotus and its quest for survival. Year-to-date, the brand is dead last in the UK sales rankings, outsold by such luminaries as Perodua, Ssangyong and Proton.

Even now-defunct Saab is handily beating Lotus. In October, 16 Saabs were sold, versus 2 Lotus cars. YTD, 231 Saabs have been sold versus 122 Lotus cars. Time for some drastic action, no?

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Proton, Honda Announce Collaboration In Malaysia http://www.thetruthaboutcars.com/2012/10/proton-honda-announce-collaboration-in-malaysia/ http://www.thetruthaboutcars.com/2012/10/proton-honda-announce-collaboration-in-malaysia/#comments Tue, 30 Oct 2012 13:00:15 +0000 http://www.thetruthaboutcars.com/?p=465275

Ahead of their crucial announcement outlining the future of Proton, parent company DRB-Hicom (also of Lotus fame) has announced that they will partner with Honda, after a long courtship process that involved numerous auto makers.

An official announcement from DRB-Hicom outlined the partnership agreement

Under the Agreement, PROTON and HONDA MOTOR will explore collaboration opportunities in the areas of technology enhancement, new product line up, platform and facilities’ sharing (“Proposed Collaboration”).

No announcement has come from Honda so far, and the words “joint venture” and “Malaysia” are conspicuously absent, leaving us at the mercy of our collective imagination. Are Lotus-tuned Acuras on the horizon? More likely is the prospect of Honda technology making its way into small cars that can eventually be exported to countries like Australia. And what about low-cost cars, a segment Honda is absent from entirely? Could there be synergy with Proton somehow? Only time will tell.

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Proton Boycotts Sales Data, Says It’s The Law http://www.thetruthaboutcars.com/2012/09/proton-boycotts-sales-data-says-its-the-law/ http://www.thetruthaboutcars.com/2012/09/proton-boycotts-sales-data-says-its-the-law/#comments Sat, 01 Sep 2012 12:36:25 +0000 http://www.thetruthaboutcars.com/?p=458624

Uh-oh: Our colleagues and fellow market watchers in Malaysia were waiting and waiting for market data for the month of July, but none arrived. With August about to end, they stared to ask questions. They were told there won’t be any data. No, it wasn’t because Malaysia suddenly is like Europe. In the Old Country, July data traditionally are supplied in September,because Europe is on vacation in August.

No, it was because Proton suddenly refused to supply its data.

Without Proton, one of Malaysia’s two sizable automakers, the statistics would be for the birds, reasoned the Malaysian Automotive Association (MAA), and called the whole report off. Proton had a surprising excuse for not submitting its sales count. Reports Malaysia’s Motor Trader:

“Proton’s refusal to supply the data is due to its belief that doing so would be an offence under the Competition Act which came into being at the start of this year. The Act, which is intended to prevent price-fixing (among other things), suggests that sharing of data by car companies is an act of collusion.”

Other car companies also curtailed their reporting over the last 6 month, but they still provide ‘top-level’ data, i.e. overall sales volumes but not data on sales of individual models.

Nasty observers could be inclined to think that troubled Proton has something to hide.

Tip of the songkok to Polar Bear

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Winterkorn: Marchionne Talks Nonsense http://www.thetruthaboutcars.com/2012/08/winterkorn-marchionne-talks-nonsense/ http://www.thetruthaboutcars.com/2012/08/winterkorn-marchionne-talks-nonsense/#comments Fri, 31 Aug 2012 09:29:30 +0000 http://www.thetruthaboutcars.com/?p=458436

 

Volkswagen chief Martin Winterkorn heaped salt into the open wounds of Europe’s embattled automakers. In light of the drooping demand, Europe could  perfectly manage with 10 fewer plants, Winterkorn said in an interview with Germany’s Handelsblatt.  However, don’t you’re your breath on Volkswagen shutting down any of its EU assembly lines. Volkswagen stand behind its European sites “without ifs and buts.” What about Sergio Marchionne’s accusations that Volkswagen is waging a brutal price war in Europe? Winterkorn: “Nonsense.”

“Success goes to whoever builds the right cars at the right time at the right place,” said Winterkorn.

With a “we have enough work on our hands at the moment,” Winterkorn dismissed rumors of Volkswagen buying Proton in Malaysia, or others.Volkswagen has enough brands for the moment. Winterkorn echoed prior remarks by his labor chief Bernd Osterloh and said that Volkswagen’s twelve brands must be consolidated first before any new ones are contemplated or acquired.

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Für Elise: Volkswagen Interested In Lotus And All Of Proton While They are At It http://www.thetruthaboutcars.com/2012/07/fur-elise-volkswagen-interested-in-lotus-and-all-of-proton-while-they-are-at-it/ http://www.thetruthaboutcars.com/2012/07/fur-elise-volkswagen-interested-in-lotus-and-all-of-proton-while-they-are-at-it/#comments Thu, 26 Jul 2012 18:47:38 +0000 http://www.thetruthaboutcars.com/?p=454359

As you read this, an old friend of mine is probably packing. Who knows, he could already be in the air. He was Volkswagen’s boots on the ground in Malaysia, the many times VW wanted to get its boots on the ground in Malaysia. Last time they tried in 2007, they disrupted Dirk’s retirement and sent him to Kuala Lumpur, where dealers of fake watches greeted him as the old friend he was by that time.  German media says, Volkswagen did not give up and they are trying again.

Volkswagen is said to be talking (again) to Malaysia’s Proton, owned by Malaysian automotive and property conglomerate DRB-HICOM. Now is a good time to buy. Lotus, owned by Proton, has burned through all of a loan facility made available.  DRB-Hicom pumped another $300 million into Lotus this year and is looking at pumping more.  The departure of the flamboyant, but unimportant Dany Bahar from the flamboyant, but unimportant Lotus made bigger headlines than the fact that this is yet another supercar pipedream going up in smoke, but that’s the way it is. Three days ago, it was reported that Proton rejected an offer of one British pound for Lotus. That’s how much the brand is worth now.

Proton, a brainchild of former Prime Minister Mahathir Mohamad, was supposed to propel Malaysia as much into the future as its electronics industry. It did not happen. Mitsubishi pulled out a few years ago. Lotus, the maker of lightweight sports cars, was no replacement for a heavyweight international partner. Proton only survived, more or less, due to protectionist laws in Malaysia. In the meantime, Malays begin to rebel against high priced low tech cars. The ASEAN Free Trade Agreement exposes Proton to the increasingly rough winds of competition.

Volkswagen probably would not mind adding yet another brand to its growing collection, especially when it means that they can invest the very important South East Asian market with Volkswagen’s bread and butter cars. Volkswagen already contracted Proton for CKD production of the Passat. Jetta and Polo are planned to follow, says Reuters. Germany’s Manager Magazin said last week that Volkswagen could be interested yet again in Proton. Today, two inside sources told Reuters that Volkswagen might “seek either a minority holding in the owner of UK sports-car manufacturer Lotus or a controlling stake.”

I tried calling my friend in Germany, but nobody is picking up.

 

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Was DRB-Hicom’s “Due Diligence” The Beginning And The End For Dany Bahar And Lotus? http://www.thetruthaboutcars.com/2012/06/was-drb-hicoms-due-diligence-the-beginning-and-the-end-for-dany-bahar-and-lotus/ http://www.thetruthaboutcars.com/2012/06/was-drb-hicoms-due-diligence-the-beginning-and-the-end-for-dany-bahar-and-lotus/#comments Thu, 07 Jun 2012 12:00:06 +0000 http://www.thetruthaboutcars.com/?p=447727

Lotus CEO Dany Bahar’s 14 day suspension is set to expire on Monday. We have no idea what will happen next. He may get the boot, taking his ambitious five-year product plan with him. Or he may not. Putting the pieces together since Lotus was taken over by DRB-Hicom has painted an interesting picture, while still leaving the future of Lotus up in the air.

In the end, it turned out that Bahar received his suspension for some spending practices that Lotus and independent auditors found questionable, including renovations to his rented home totaling $54,152, and over $1.5 million in private aircraft fees. According to the Daily Mail, the paper that broke the story, Bahar received compensation worth $1.85 million on top of those perks, while Lotus had an operating loss of $1.5 million in 2011, along with debts of $309 million.

Despite fears of parent company DRB-Hicom (owner of Proton, which in turn owns Lotus) offloading the Lotus brand to the Chinese (a common fear for enthusiasts), it looks like Lotus might be safe under Malaysian stewardship for the near future. DRB-Hicom initiated an independent audit  of the company back in March, following compliance failure for a 2010 loan worth nearly $418 million, which was being guaranteed by Proton. A report in the Malaysian press detailed the issue

In March, Proton, in its third quarter results, noted that its subsidiary was in a technical breach of certain post drawdown covenants on its existing long-term loan. It has requested for an extension of time to fulfil the covenants and has submitted an appeal to the lenders.

For now, the loan amounting to RM1.01bil had been re-classified as a short-term loan as at Dec 31, until the receipt of approval for the extension of time.”

Early March was also the start of Lotus suspending development of the new Esprit, while also putting a hold on Bahar’s five-year plan. Officially, only day to day operations could be carried out under Malaysian takeover laws while DRB-Hicom conducted its due diligence of Lotus, which may have ended up being the audit discussed in the above reports by the Malaysian press. That period was supposed to have wrapped up by the end of March, but in mid-April, Bahar seemed to have no idea regarding the future direction of the company, aside from DRB-Hicom’s indications that they’d hang on to Lotus. But by May, Bahar was in the doghouse just when he claimed that a decision on his plan would be made, and Proton’s managing director and CFO resigned, and the company issued another denial that it had planned to sell Lotus.

The July issue of EVO magazine claims that only 43 new Lotus cars were registered in the UK at the time of publication, with eight cars registered in April, 2012. In 2011, 37 Lotus cars were registered in that month alone. Despite this, Lotus is claiming that the poor sales are a result of a re-jigging of their dealer network, and that they have orders for 1,168 cars in total [Bahar claimed 1162 in an April web interview with EVO].

The tragedy here seems to be that Lotus is on the up-swing in terms of product. The Evora S, Exige S V6 and Elise S have been well-received by the press, and Bahar’s future plans for a new Esprit and an expanded model range looked like they’d be the kind of cars that could expand the appeal of Lotus cars beyond the narrow hard-core enthusiast customer base. If the allegations are true, then Bahar may have become a victim of the kind of hubris and irresponsible behavior that has been the downfall of countless individuals. Let’s see what Monday holds.

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Lotus Investors: Sell! Sell! Sell! http://www.thetruthaboutcars.com/2011/12/lotus-investors-sell-sell-sell/ http://www.thetruthaboutcars.com/2011/12/lotus-investors-sell-sell-sell/#comments Tue, 27 Dec 2011 16:53:02 +0000 http://www.thetruthaboutcars.com/?p=423575

Lotus is one of those brands that every auto enthusiast loved to lionize, despite (or possibly because of) the fact that it hasn’t made a profit for its owner, Proton, in 15 years. But now things are changing. Lotus itself is in the midst of a makeover, seeking to transition from niche sports- and track-car company to a Ferrari and Porsche-rivaling aspirational brand. Meanwhile, back in Malaysia, its owner, Proton, is undergoing a few changes itself. Having been founded as a state-backed business, Proton may soon be privatized, reports Bloomberg. And as a result, Protons private investors could push for a quick divestment of the firm’s Lotus holdings. One such investor, Gan Eng Peng of HwangDBS Investment Management, tells Bloomberg

It will make sense for them to sell it. Proton and Lotus are not a good fit. They are in different market segments, both in terms of geography and product.

Chinese automaker SAIC and Genii Capital have been rumored as possible buyers, although Proton denies all rumors that Lotus is for sale. The problem is that Lotus won’t be worth much until 2014, the brand’s earliest projected break-even date. And even then, Bloomberg’s analysis shows that Lotus’s highest possible value then still wouldn’t be enough to return Proton to profitability, in light of increased competition in its home market of Malaysia. But in the meantime, Proton has no (useful) synergies with Lotus, and as the automaker emerges from the warm embrace of government ownership into the harsh light of the global market, it seems that selling off Lotus may be unavoidable.

Which leads to an interesting question: which automaker seems most likely to buy up Lotus? My money is on VW, who might buy the brand for no other reason than to kill off Alfa, after Fiat refused to sell. Of course, then it might create branding challenges with Porsche, but Alfa would have done so anyway. Another possible buyer: Toyota, which supplied Lotus with engines for years. In any case, we can probably count GM out of the picture, after their abortive relationship with the British brand.

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Adventures In Global TV Marketing: The Citroën AX http://www.thetruthaboutcars.com/2011/02/adventures-in-global-tv-marketing-the-citroen-ax/ http://www.thetruthaboutcars.com/2011/02/adventures-in-global-tv-marketing-the-citroen-ax/#comments Thu, 10 Feb 2011 20:30:10 +0000 http://www.thetruthaboutcars.com/?p=383508
Sure, Internet video is mostly about dental-fetish porn (particularly the very stimulating “spit sink” subgenre), but when the novocaine wears off and the last vinyl-clad hygienist has put aside her last stainless-steel scraper, you’re ready to explore the other great thing about Internet video… old television ads for the Citroën AX. The AX had quite a run, being built for model years 1986 through 2000 (counting the Proton-built version, the Tiara), and— who knows?— its tooling may yet be brought back into action in some out-of-the-way corner of the world.


Since assembling this collection of Citroën ads a couple years back, I’ve associated the AX with this early French-market ad showing a woman using the Great Wall of China as an exclusive highway for her AX. She catches some serious air, then stops short when a couple of ancient Long March veterans express their revolutionary approval. Down with the Four Olds!


Continuing the “revolutionary Asian locale” theme, Citroën then headed to Tibet, where an AX shows its off-road prowess on the way to a visit with a holy man. No doubt the Chinese government wasn’t so happy about this one, but Citroën sales in China didn’t amount to much in the late 1980s.


As the AX matured and a GT model came out, French-market advertisers decided they’d head over to New York City— like China, a place not known for street-driven AXs— and show off the car’s ability to get through madhouse traffic. In fact, the AX GT can squeeze through traffic even faster than a super-hip bike messenger with a willingness to ride down stairways and over the roofs of gridlocked cars.


In Spain, potential AX buyers must have focus-grouped as being fascinated by the American Southwest, because we’ve got a Harley-riding thug stalking a beautiful, AX-driving young woman from a desert greasy spoon to a railroad crossing. I won’t give away the surprise ending, which apparently is meant to show that the AX is practical as well as sexy, but it sure looks like the start of a made-for-TV serial-killer drama to me.


Citroën UK’s marketers decided to go with cuteness for this 1992 advert; a cartoon cupid’s arrows can’t catch the nimble AX and melt the cold, cold heart of the protagonist’s female companion. Thwarted! But wait! The AX itself gets the job done, and the camera fades to black as the couple prepares to make with the bouncy-bouncy on the road shoulder. Yes, the AX makes a man a real bull on the springs, if I may rip off a Bukowski-ism; it’s the Frenchness that does it. Hey, wait a minute, isn’t that car left-hand drive?


Mazda’s short-lived Eunos brand sold the AX in Japan for a few years in the early 90s, and the JDM-car-ad requirements of jaunty music, sexy foreign woman, and macho voiceover are all met in this ’91 AX ad.


But you really need to bring the AX to Malaysia to unlock the true advertising potential. This two-minute-long special-effects extravaganza for the Proton Tiara features a canoe-paddlin’ hero, a tiger that morphs into a tiger-striped muscleman, and an attractive— though modestly dressed, no doubt in deference to Malaysia’s Muslim population— woman who uses magical powers to summon a Tiara from the ether.


It’s for the CX and we’ve all seen it before, but it seems wrong to talk about classic Citroën ads without showing the what-the-hell-were-they-thinking “Robot Grace Jones” ’84 CX ad.

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Not All Ripoffs Come From China…. http://www.thetruthaboutcars.com/2010/12/not-all-ripoffs-come-from-china/ http://www.thetruthaboutcars.com/2010/12/not-all-ripoffs-come-from-china/#comments Tue, 07 Dec 2010 16:04:43 +0000 http://www.thetruthaboutcars.com/?p=376054

It’s a bird, it’s a plane, it’s a Mitsubishi Evo… or not. What we’re actually looking at here is a Proton Jebat, Malaysia’s (copied) answer to the Evo X. And though Proton got the Evo X’s looks down to a T, they weren’t quite able to replicate the rally-bred Mitsu’s secret sauce performance-wise. Proton’s two-liter turbo four makes a mere 237 HP and 253 lb-ft compared to the Evo’s 291 HP and 300 lb-ft. Still, because the Inspira on which the Jebat is based is essentially a rebadged Lancer, there’s a chance that the Jebat has a Mitsu-developed AWD system under the skin… but Proton’s not saying. And the Lancer-alike Jebat isn’t the only rebadged Proton the Malaysian OEM has put out of late. A rebadged Lotus Europa was also shown at the recent Malaysian Auto Show as the Proton Lekir, powered by a 1.6 liter Proton engine. Yes, Virginia, countries other than China are dependent on rebadges and knock-offs for new product…

Proton-Jebat-5 Proton-Jebat-4 protonlekir Proton-Jebat-3 protonlekir2 Not an Evo.... protonlekir1 ]]>
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VW In Tie-Up Talks With Proton http://www.thetruthaboutcars.com/2010/05/vw-in-tie-up-talks-with-proton/ http://www.thetruthaboutcars.com/2010/05/vw-in-tie-up-talks-with-proton/#comments Thu, 27 May 2010 17:52:54 +0000 http://www.thetruthaboutcars.com/?p=357422
Having recently hooked up with firms like BYD and Suzuki, Volkswagen is continuing its rampage across the developing world’s markets, as Reuters reports that the VW’s leadership is in talks with the Malaysian state-owned (42 percent) automaker Proton. VW had previously sought an alliance with Proton, but talks broke off without an agreement in 2007. According to Bloomberg BusinessWeek, VW is not likely to take a stake in Proton despite last year’s policy shift by the Malaysian government allowing foreign firms to own majority stakes in mainstream Malaysian automakers. Proton was founded as a joint venture between the Malaysian state-owned firm Khazanah Nasional Berhad, and Mitsubishi.

Proton just posted a $72m profit for the fiscal year ending in March, after losing some $90m last year despite strong protectionist tariffs imposed by the Malaysian government. Or is that because of protectionist tariffs? Proton’s market share has been in decline for years now, thanks to government subsidies of its outdated designs. Perodua passed Proton in 2005 as the best-selling domestic Malaysian automaker, with over 40 percent of the market. Between 2002 and 2005, Proton’s Malaysian market share fell from 60 percent to barely 30 percent.

Speculation about a Proton-VW tie-up has been rampant in Malaysia for years (and the firm has also been tied to talks with PSA and GM), but now that it appears to be happening, the details are emerging slowly. Apparently an equity stake isn’t likely, meaning cooperation will probably focus on platform and engine sharing. It’s also possible that Proton’s excess capacity could be used to build Volkswagens, and Proton could replace its Perdana sedan with a rebadged Passat.

For now though, we’ll have to wait on details. According to Proton’s Chairman Mohamad Nadzmi Mohamad Salleh, a deal still won’t be announced for “one or two weeks.”

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