Friday, March 30, 2007

VW scraps tie-up with Proton

Updates posted to the comments section of this blogpost.

This appeared in today's Straits Times in Singapore.

Also have a read of NST Online's coverage of this story.

You'll notice that NST made their report sound as bland - as sex in the missionary position with an Englishman with sore knees... - by leaving out all the "spicier" remarks from the original report, like the ones below:

"...this is a major setback and could hurt investor sentiment"

"...the govt will need to come up with a solution quickly"

"...clearly they don't want to pour any resources into turning Proton around"

"...getting the locals to lead Proton's turnaround is not what the govt wants. But it looks like it doesn't have a choice"
Related blogposts: The Problem with Proton


seantang said...

Malaysia evaluating Proton partner options
March 30 2007

THE Government is still evaluating options to find a strategic partner for national carmaker Proton.

As a result, the Government will not be able to meet the deadline to name a strategic partner for Proton, said Second Finance Minister Tan Sri Nor Mohamed Yakcop.

The deadline was set for end-March.

He made no reference to a news report that German carmaker Volkswagen has scrapped plans for a tie-up with Proton.

Among suitors for the stake include General Motors, DRB-Hicom and the Naza Group.

Peugeot Citroen PSA had earlier pulled out of a possible deal with Proton.

Meanwhile, a VW spokesman told AFP: “There are still talks. We’re still negotiating.”

This is despite a newspaper report which said that the German giant had pulled out of the talks. - Bernama, AFP

seantang said...

VW seeks Malaysia meeting on Proton talks
March 30, 2007 - 9:00 am EST

KUALA LUMPUR (Reuters) -- A newspaper said Volkswagen AG had scrapped tie-up plans with Malaysian automaker Proton, but VW said high-level talks continue.

Malaysia had set an end-March deadline to find a strategic partner for state-controlled Proton to give it greater access to foreign markets and had said it was talking only to Volkswagen about a strategic alliance.

A government source told Reuters that Volkswagen had sought a meeting with Malaysia's prime minister, Abdullah Ahmad Badawi, but that one had yet to be scheduled.

"I know that there's an expression of interest for the (Volkswagen) CEO to come and call on the PM," the person said.

Past experience suggests that the German firm is interested in entering the ASEAN car market but has so far found Proton to be a difficult ally.

The Malaysian firm has posted three consecutive quarterly losses and relinquished its lead in volume sales to domestic rival Perodua, which has enjoyed surging demand thanks to models such as the Toyota-based Myvi subcompact.

VW first reached an agreement on a "long-term strategic partnership" with Proton in October 2004, only to abandon plans to build VW brand cars from kits in Malaysia months later.

Both General Motors and French rival PSA/Peugeot-Citroen explored a tie-up with Proton before also dropping out of the running.

Singapore's Straits Times newspaper, quoting an unnamed Malaysian government official, said Volkswagen had scrapped plans for a deal and had told state investment firm Khazanah Nasional Bhd, a key shareholder in Proton, that setting up a production platform in southeast Asia was not a key priority at this time.

The German firm told Khazanah on Thursday, March 29, it wanted to focus on building its business in Russia and India, the paper added.

But a Volkswagen spokesman would not confirm the report.

"There are still talks, including some at the highest level," he said in Germany.

A Proton spokesman had no immediate comment on the report, while officials of Khazanah could not be reached.

"Clearly, they don't want to pour any resources into turning Proton around," the paper quoted the Malaysian government official as saying.

The official added that an announcement on the collapse in the merger talks could come as early as today, the paper said.

Malaysian Deputy Prime Minister Najib Razak said on Wednesday, March 28, that the government was not sure it could meet its end-March deadline to find a suitor, though media reports had quoted Volkswagen officials as saying talks were at a "fairly advanced stage."

seantang said...

Malaysian PM to meet Volkswagen chiefs, says official
Sunday April 1, 3:44 PM

Malaysian Prime Minister Abdullah Ahmad Badawi is expected to meet with top officials from German giant Volkswagen over the future of ailing national automaker Proton, a senior official said Sunday.

"A high level meeting is expected soon. It is being arranged," the official who is familiar with the on-going talks on a possible tie-up told AFP.

The official, speaking on condition of anonymity, said the meeting would take place in Malaysia but declined to elaborate further.

"There is genuinely good faith between the parties," he added.

Abdullah has said Malaysia may allow Volkswagen to gain a controlling stake in Proton, a move that would help turn around the fortunes of the company.

The planned meeting comes as Malaysia missed a Saturday deadline to name a strategic partner for Proton, whose controlling shareholder is state investment arm Khazanah Nasional which holds a 42.7 percent stake.

Volkswagen said Friday it was still negotiating with Proton over a possible accord after a report that the German company had pulled out of the talks.

Analysts say a foreign partner is crucial to Proton's survival as it battles sliding sales due to growing competition from local and imported autos.

The planned meeting comes as distributors of Proton urged the carmaker to quickly form partnerships to reverse falling sales.

Wan Ahmad Sepwan Wan Abdul Rahman, president of Proton Edar Dealers' Association, warned that poor sales may force about 70 percent of its members to close shop.

"Every dealer has to sell between 35 and 40 cars a month to sustain their operation but since last year they could sell only between 10 and 15 cars a month," he was quoted as saying by Bernama news agency on Saturday.

Wan Ahmad said there were almost 400 Proton dealers nationwide, far too many for a single brand, adding that Proton should forge strategic alliances to stimulate the sales of Proton cars.

Earlier this month, negotiations with French car giant PSA Peugeot-Citroen collapsed in what has turned into a long running saga to find a partner for the struggling Malaysian company.

It posted a third consecutive quarterly loss of 281.45 million ringgit (80.40 million dollars), in the three months to December compared with a net profit of 86.51 million ringgit a year earlier.

seantang said...

PM says still talking to GM on Proton

Malaysia is still talking with General Motors Corp for a possible tie-up with state-controlled carmaker Proton Holdings Bhd, Prime Minister Datuk Seri Abdullah Ahmad Badawi said on April 2.

German carmaker Volkswagen AG had been seen as the frontrunner to partner Proton until last Friday, when a Singapore newspaper reported that Volkswagen had broken off the talks.

Abdullah declined to give any details on the status of talks with either Volkswagen or General Motors and said the government was now waiting for Proton itself to make a decision. - Reuters

seantang said...

PM meeting Proton chief over decision on strategic partner

Datuk Seri Abdullah Ahmad Badawi today said Proton managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir will meet him to discuss the final decision on a strategic partner for the national carmaker.

“I am waiting to meet Proton chief. He has indicated that he wants to see me. So, I am expecting him to come anytime,” the Prime Minister said at a news conference after attending the Malaysian heads of mission conference here.

Abdullah said discussions with the potential strategic partner was nearing completion.

“The (talks) at the level of officials are nearing conclusion. They have to present the full report to me,” he said when asked on the progress of discussions involving Volkswagen and General Motors.

It was reported that Abdullah was expected to meet top officials from Germany’s Volkswagen over the future of Proton.

Queried on a fresh deadline in naming Proton’s partner, he said: “We want to conclude the talks as soon as possible.”