I still don't get why GM would be interested in another loss making division. They already own Daewoo, which occupies the same market segment but has more productive factories despite South Korean unionism. They have chronic oversupply in all segments, including the budget segment. What possible need would they have for Proton?

 

just don't see a point

 

Cheap production capacity and a Malasian dealer network possibly...for those reasons I could even see a possible appeal to Chinese car makers.

 

They are already selling cars in Malaysia, they have CKD factory/JV over there( some with Proton). and better received than Proton.

but Lotus is very appealing.

 

The reason that VW and GM are interested is predominantly the fact that Proton has a large, reasonably high tech manufacturing setup that is running at under 50% capacity...this factory could therefore easily turn out a decent amount of VAG/GM vehicles that could then be sold throughout the ASEAN region (Malaysia being an ASEAN country) without the tariffs associated with vehicles built elsewhere.

Lotus may seem to be appealing, but GM has already sold Lotus once, and both can probably already do similar stuff to what Lotus does, in-house.

 

GN owns Daewoo, also an ASEAN nation.

 

Actually,South Korea isn't an ASEAN country...not quite.

The ten ASEAN nations are:
Indonesia
Malaysia
Philippines
Singapore
Thailand
Brunei
Vietnam
Laos
Myanmar
Cambodia


Although there is a regional forum called ASEAN Plus Three, which include the East Asian nations of Japan, China and South Korea. Still, these countries' products still have tarrifs imposed on them when sold in ASEAN nations I'm pretty sure, although a goal of ASEAN Plus Three is the founding of an Asian Free Trade Zone.

 

This article fits here

Malaysia's Proton, Volkswagen to hold third round of talks this week
Posted: 27 June 2007 2321 hrs

KUALA LUMPUR : Malaysia's ailing carmaker Proton and Germany's Volkswagen AG will hold a third round of talks this week in an attempt to secure a partnership by year-end, an official said on Wednesday.

"(The talks) should be held this week," a Malaysian official familiar with the negotiations told AFP on condition of anonymity.

The official declined to disclose the location of the talks.

The Malaysian team comprises officials from the prime minister's department, ministry of finance and Khazanah.

The previous two sessions were in New York and Bangkok earlier this month.

Azman Mokhtar, managing director of state investment arm Khazanah Nasional, on Tuesday said that a deal was expected to be clinched by year-end, adding that Volkswagen and US giant General Motors were vying to become the strategic partner for Proton.

"Talks are ongoing. We are making steady progress ... The overall deadline is year-end," he said.

The official said Malaysia was conducting "multilateral talks" but the conversation with "GM was less active."

Khazanah is the controlling shareholder in Proton, with a 42.74 percent stake. State pension fund EPF and national oil firm Petronas own 12.07 percent and 8.84 percent respectively.

Officials had said that Proton and Volkswagen were cautiously edging towards a partnership after a second round of talks in Thailand.

The government is under intense pressure to announce details of a partnership for Proton in a bid to provide it with the expertise to stem a sharp decline in market share and cut financial losses.

Proton last year lost its status as Malaysia's biggest-selling automaker to home-grown rival Perodua and recently reported larger than expected net losses of 591.36 million ringgit (174 million dollars) for the year to March 2007. - AFP/de

 

According to Autocar VW is developing a 'Dacia Logan' and they need cheap production facilities to manufacture it. Proton and even it's brand could be ideal for something like this.

Guess that might mean Lotus could be up for sale again unless VW have a home for a sportscar maker and some great engineers.....maybe they could make Lotus into a SEAT sister brand or something.

 

According to Autocar VW is developing a 'Dacia Logan' and they need cheap production facilities to manufacture it. Proton and even it's brand could be ideal for something like this.

This, if true, would be a seriously appealing proposition for Volkswagen - the huge success of the Logan means that there is suddenly a serious market for the 'world car', which seemed to be a market dominated by a maximum of half a dozen cars, plus a small amount of others on miniscule production outputs.

The trouble is although it would be a benefit to both VW and Proton, I can't see Lotus fitting in with a 'world affordable car' manufacturer. To be honest I don't think it has fitted in with Proton during the past 11 years of its majority stake, apart from the surprising Satria GTi which finally showed a link with the two firms. Proton has not used Lotus to its full potential, apart from the odd suspension system here and there.

 

...I can't see Lotus fitting in with a 'world affordable car' manufacturer.

When it is no problem for Bentley and Lamborghini - and VW and Audi themselves - it should hardly be a problem for Lotus. The outcome of those talks remains to be seen, but Lotus would fit into the VW group. Compared to now that would offer Lotus undreamed-of possibilities.

 

Another thrilling article

Third round of talks on Proton over

By YAP LENG KUEN

PETALING JAYA: The third round of talks between the Government and Volkswagen on the future of Proton Holdings Bhd has just been concluded.

Sources told StarBiz the parties, involving the Ministry of Finance, Khazanah Nasional Bhd and Volkswagen, held their talks early this week.

It is not known whether there will be another round. The outcome of this third round of talks is not known either.

Second Finance Minister Tan Sri Nor Mohamed Yakcop had said earlier that the second round of talks held in Bangkok had been reasonably positive.

 

I was on about Lotus's links with Proton - it has always seemed odd.

 

The haggling goes on

03-07-2007: Cash or in kind for Proton assets?
by B Suresh Ram

Negotiations between Volkswagen AG (VW) of Germany and Malaysian government officials for key assets of Proton Holdings Bhd now hinge on one major issue, sources said.

It is believed that for key Proton assets, its largest shareholder Khazanah Nasional Bhd expects to be compensated in cash. However, it is understood that VW has offered value "in kind" and is not willing to pay cash.

It is believed that the value "in kind" refers to platforms and intellectual property, which would include the waiving of royalty fees.

Sources said Khazanah and other Malaysian officials may have been blind-sided by VW's decision not to offer a cash consideration because in the first round of negotiations in 2005 cash was "definitely an option on the table".

However, according to industry players, royalty fees can be debilitating and thus it may not be wholly unacceptable if VW waives royalties in lieu of a cash consideration.

From Khazanah's perspective however, sources say the reluctance to accept payment in kind is understandable because Proton's key assets are worth billions of ringgit. Its Tanjung Malim plant itself is worth some RM1.8 billion. Other assets on the table would include its research & development facilities, engineering division and British sports car manufacturer Lotus, all of which are expected to be injected into a new company. VW is expected to hold a 51% stake in the new company and Proton the remaining 49%.

Proton has been on the lookout for a strategic partner for years. It first commenced negotiations with VW in 2004 but talks were called off in late 2005. Talks recommenced in 2006 and started making some serious headway in June this year after meetings in New York and Bangkok. Proton registered full year losses of RM591.36 million for its financial year ended March 31 2007. The outlook for the current financial year is as bad.
...

 

The Proton puzzle has a lot of pieces

16-07-2007: Foreign partner's entry into Proton being paved
by Surin Murugiah

The government's recent move to remove restrictions on the number of imported cars from Asean countries is being seen as paving the way for the entry of a foreign partner into Proton Holdings Bhd.

The lifting of the restrictions, while in line with the country's commitment to the Common Effective Preferential Tariff (CEPT) under the Asean Free Trade Agreement (Afta), has raised eyebrows.

The recent development in the domestic auto industry, which includes the easing of restrictions on the imports of used cars by the Malay Vehicles Importers and Traders Association (Pekema), has piqued the interest of some analysts.

An analyst with a local research house said the recent news flow was strangely coinciding with the ongoing negotiations between Proton Holdings Bhd and German carmaker Volkswagen AG (VW).

She said the Ministry of International Trade and Industry (Miti) seemed to be back-pedalling with its latest move.

The analyst said the national automotive policy implemented last year was originally aimed at phasing out approved permits (AP) for used cars by 2010 and also protect national carmaker Proton's interests.

"Why are these AP and quota removal issues cropping up now? It is coinciding with the ongoing negotiations between Proton and German carmaker Volkswagen AG.

"Could it be a case that VW is cornering the policy makers into making Malaysia its platform to export its cars to Asean countries as part of the deal to be Proton's strategic partner?"

"VW might be twisting Khazanah Nasional Bhd's arm and making sure the deal is linked to it being able to use the Proton manufacturing facility to export both the national car as well as VW marques into the regional market," the analyst told The Edge Financial Daily.
...

 

And the saga continues, although it appears a deal may have been inked, finally!

Proton Shares Rise on Report of Volkswagen Agreement (Update1)

By Angus Whitley

July 23 (Bloomberg) -- Shares of Proton Holdings Bhd., the unprofitable Malaysian carmaker, rose on a report that Volkswagen AG may have agreed to share technology with the company and to buy a stake in its manufacturing unit.

Proton stock climbed as much as 5.2 percent after the Edge magazine said Volkswagen may pay several hundred million ringgit and supply vehicle platforms as part of an accord. Volkswagen, Europe's largest carmaker, will own 51 percent of a new company that will own Proton's manufacturing arm, the report added.

``The pact seems to be just waiting for a formal conclusion,'' said Mohd Hanafi, an analyst at Alliance Research Sdn. in Kuala Lumpur with a ``buy'' rating on Proton stock. ``Any sort of new development which is positive would definitely have an impact on the share price.''

Control of Proton's carmaking division may cost 900 million ringgit ($263 million), according to estimates by Hwang-DBS Vickers Research Sdn. The state-run carmaker needs a partner to help roll out new models and reverse slumping sales.

Mohd Asuki Abas, a spokesman for Khazanah Nasional Bhd., declined to comment on the report. Khazanah, a Malaysian government investment unit, owns 43 percent of Proton. Faridah Idris, a spokeswoman for Proton, said she was unable to comment immediately.

Proton shares climbed as much as 30 sen to 6.10 ringgit and traded at 5.90 ringgit at 10:57 a.m. in Kuala Lumpur. The stock has fallen 11 percent this year compared with a 26 percent gain by the Kuala Lumpur Composite Index.

According to the deal, Proton will control domestic vehicle distribution and Volkswagen will oversee international sales, the magazine said.

Khazanah Managing Director Azman Mokhtar said on June 26 that he plans to find a partner for Proton before the end of the year.

A tie-up between Proton and U.S. carmaker General Motors Corp. is unlikely because Proton sells vehicles in Iran, the Edge said. GM stipulated that Proton must pull out of Iran, a condition that won't be met, the magazine said.

 

Basically VW can bring in a brand under Skoda to compete with rthe KIAs and...the Chinese and Indians. Makes sense.

 

Hard to believe that the Proton saga could be over soon, compared to it the Lord of the Rings was a short story

As long as there is nothing official from Volkswagen I hesitate to believe that... but it will be interesting when they tell us what they really have in mind with Proton (and Lotus).

 

I can see what VW has planed for Proton, but Lotus? I fear Lotus will be sold off. But to who? Not another David James I hope.....where is that AC? May be Prodrive/ Aston Martin...

 

Porsche own VW so they hardly want Lotus. However, there's a lot of interest in small flexible assembly plants like Lotus: the Tesla is a good example of something they are good at plus the Vauxhall VX. There is a market.

 

For what?

They will hardly need more capacity, at first they must fill the huge gap the X3 leaves (production of the next model goes to the US).

 

Aston Martin for starters. They've made it clear that they don't want to manufacture cars but outsource them. They will not be alone. There's a new market opening up similiar to that the Italians have run for years.

Think of a brand like Virgin: they don't make anything but outsource production of their ideas. It's the next motoring trend.

 

Lotus could fit with VW but I'm not sure they would want to dedicate management time to it....

 

What ? You're talking about outsourcing production ? Sorry mates, but ask the guys from Bertone & Karmann, both have no new outsourcing contracts at the moment. Bertone has a factory with a capacity of 70.000 cars p.a., but no car maker had any interest in giving them a outsourcing contract for producing a car in the last 3 years....therefore they fired some of their 1500 man strong staff... In Europe there's overcapacity in car production of
20 %, therefore most of the carmakers brought the production of niche models to their own factories....every car maker wants to run its factories on full capacity...(e.g. the latest decision : the shift of the BMW X3 production from Magna Steyr to BMW factory...)
If VW would want buy to "some production capacity" for niche models, it would much cheaper to buy Bertone...'cos this company is financially on its knees...or even Karmann would be very cheap to acquire... (and at least there's a historical link between VW and Karmann : The VW Karmann Ghia....)
So having "LotusGroup" in its company portfolio would not be a question of getting "more production capacity"....it would be a nice addition to their other brands....but is there a place for Lotus in the VW-family ? Everybody remembers the crazy VW GX3-threewheeler ?.... It was canceled ...'cos VWs lawyers said : This could make us some serious "headache"....if we see the safety of this car...and the potential of problems with US customers... no it's too risky....than the GX3 project was canceled... and they even didn't want to sell this car to a small car company which was interested in the GX3...they wanted to bring it to production...but VW said : NO....err "NEIN".
What amuses me is : Nor Proton, neither VW is talking officially about Lotus...and no officials link the future of Lotus to the future of Proton and the talks with VW....and this talks look like a never ending story...but meetings in London...and other nice and posh places seems to be a nice "incentive" to discuss this long enough.... what's next ? A romantic week- end for Proton and VW executives and their wives in Paris ?

 

...every car maker wants to run its factories on full capacity...(e.g. the latest decision : the shift of the BMW X3 production from Magna Steyr to BMW factory...)

If BMW will shift production of the X3 from Graz (Austria) to their own Spartanburg (USA) plant their reason is not that they have unused capacity. Even without the X3 the Spartanburg plant receives an expansion, to make them able to build the X3 the needed expansion will be even bigger. Right now 4,700 employees build 500 cars every day, in a first step BMW will raise the production capacity from 140k to 200k by 2010. This figure is without the X3.

The last meeting between VW and Proton was obviously here in Germany (no idea where).

 

I do not think that who ever are the new owners of Proton will want Lotus. with a fleet average Co2 of sales in Europe in excess of 220 g/km, and a target objective of 120 g/km Lotus may have a liability attached to it. It could well be better for Lotus to go it alone. Don't foget Lotus Engineering are heavily involved with Youngman in China to develop a full range of cars and engines.

You never know in the complex world that is Chinese automotive Lotus may end up back in bed with SAIC and NAC and MG. I think China will be the key to Lotus' future...or the USA with Telsa?

 

I think it will go to someone like Pro-drive or even ARUP. Don't forget Lotus doesn't just make cars it also engineers and designs them for others.

 

They are moving ahead at full steam...

KUALA LUMPUR (Thomson Financial) - Volkswagen AG (VW) is expected to conduct a due diligence on certain assets of Malaysia's national carmaker Proton Holdings Bhd sometime this month, the Edge Weekly reported on Monday, citing unnamed sources.

Proton's senior management has been informed of the due diligence and has been instructed to facilitate and accommodate it, according to the report.

The Malaysian government, through its investment arm, Khazanah Nasional Bhd, owns 43 percent of Proton. Khazanah has been active in negotiations over the past few months about forming an alliance between Volkswagen and Proton.

There is speculation in the market that Volkswagen is negotiating for a controlling stake in Proton's manufacturing division.

Copyright AFX News Limited 2007.

 

Proton is heading China.... or Lotus

translated by Google

the British Lotus and youth Motors(a very small bus manufacturer,selling1-2k buses a year ), Lotus led to the establishment of the joint research and development of Lotus youth center. Win-Win Team of the two car giants whether consumers will bring to China the first "secret weapon"?

2006 Beijing International Auto Show, the British Lotus booth a mysterious five door hatchback coupe with beautiful appearances. Britain opened a Lotus coupe entered the China market in the district. Her stylish appearance, similar to the Lotus sports car classic, and the quintessence of a debut win the hearts in the show caused a tremendous sensation. Coupe which is subject to the British Lotus Holdings commissioned side, carefully took three years to build the world-class coupe, the total development cost more than one billion ringgit (equivalent to more than £140m). And specifically tailored models for the CAMPRO engine, research and development costs as high as 400 million ringgit (equivalent to more than £30m). To better adapt to China's road to meet the needs of Chinese consumers. British Lotus technology center that models the overall technical upgrades, including an increase of OBD upgrade chassis, improve low-speed power, reaching Europe IV standard ECU upgrade, Application variable cam engine and variable inlet manifold skills, among others. China's car market in the face of intense competition circumstances, always focused on creating high-end products to the youth with the British Lotus car combination, and it coupe as a competition in China's car market of choice for "weapons", it is bound to have great potential in China's car market. In addition to the paragraph "secret weapon", Lotus led the joint research and development centers carefully crafted paragraph 2 "secret weapon" (B-Class) has developed an advanced stage. According to internal sources, the vehicle will be equipped with world-renowned brands 1.8T engine, Mold its development costs of up to £20m, and has completed mold tender. In addition, youth Lotus joint research and development centers worldwide rely on Lotus engineering forces (British Lotus, Lotus, Malaysia Lotus, Lotus, etc.) within the next four years will be rolled out eight, the world's leading high-end technology and excellent quality of passenger cars, products covered palanquin running, family cars, minivans, SUVs and many other models, the emission from 206 to 3.0L.

 

And the saga nears it's conclusion...

AFX News Limited
Malaysia's PM confirms Volkswagen conducting due diligence on Proton
08.16.07, 12:08 AM ET

KUALA LUMPUR (Thomson Financial) - German car maker Volkswagen AG is conducting due diligence on Malaysian national car maker Proton Holdings Bhd as part of negotiations for a possible strategic alliance, Prime Minister Abdullah Ahmad Badawi confirmed for the first time.

He told Agence France-Presse late Wednesday it is important for Proton to be 'comfortable' with its potential partner.

'And as soon as that is confirmed, then I believe we must tie up the deal as quickly as possible,' he said.

He gave no other details of the possible tie-up.

If the alliance is pushed through, it is expected to give Proton a boost in efforts to reclaim its top spot in the local car market.

Abdullah said Proton's launch Wednesday of the Persona, a replacement model for the 14-year-old- Wira, had 'nothing to do' with the timing of Volkswagen (other-otc: VLKAF.PK - news - people )'s 'due diligence' study.

'But it does prove to everyone in the world that Proton is still capable of coming (up) with an excellent and superb product,' he said on the sidelines of an awards ceremony.

'We are confident that Persona is the product that will put Proton back in the map and as the leader in the Malaysian market.'

Proton recently reported bigger-than-expected net losses of 591.36 million ringgit for the year to March 2007.

But Proton isn't resting on it's laurels either:

Proton revs it up with Persona
By Zuraimi Abdullah
bt@nstp.com.my

August 16 2007

PROTON Holdings Bhd unveiled its new Persona sedan yesterday, expecting the competitively-priced 1.6- litre model to jump-start its revival to regain the leading position in Malaysias automotive market.

Dubbed by Proton as its pride and joy, the Persona was launched by Yang di-Pertuan Agong Sultan Mizan Zainal Abidin at the Proton Centre of Excellence in Shah Alam.

Proton chairman Datuk Mohammd Azlan Hashim said the Persona had already received over 2,200 bookings since its soft launch on July 21.

Managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir expects monthly sales of more than 4,000 units.

There are also plans to export the car to Singapore, Thailand, Indonesia, the United Kingdom and Australia.

You cannot concentrate on the domestic market alone as it is getting smaller. Thats why we have to export, Syed Zainal said.

The company was pushing for export to reduce its pro - duction cost and gain better margins, he added.

Persona, which means vision of beauty, will be replac - ing the 14-year-old Wira.

It is in competition with the likes of Perodua Myvi and Viva, Toyota Vios and Honda City in the sub-B and B segments category.

We are confident of attaining good sales as the entire packaging of the car is attrac - tive, Syed Zainal said.

He added that pricing strategy and timing could also help Proton meet its targeted monthly sales.

Available in both manual and auto versions, the Persona is the most competitively priced 1,600cc car as its price ranges from RM44,999 to RM55,800. The car is designed to fulfil key criteria like style, safety, spaciousness, practicality, quality, comfort and performance.

It comes in iridescent white, metal grey, tranquility black, solid white, solid red, light gold and blueberry tea.

On whether the Persona will affect sales of the Waja and Gen.2, Syed Zainal said both the 1.6-litre models will be repositioned upwards.

Plans are in the pipeline to introduce premium and high performance versions ofWaja CPS and Gen.2 CPS.

He added that theWaja was already seven to eight years old, and due for change.

It is not something that we are going to be concerned about as we are also pushing 5,000 units of theWaja for the Iran market. The production will start in October,he said.

 

Still no decision, but a new article

VW aims to take 20 pct stake in Proton - source

FRANKFURT, Sept 12 (Reuters) - Volkswagen AG wants to take a 20 percent stake in Malaysian carmaker Proton and could increase its share to a majority, a person familiar with the situation said on Wednesday.

Wolfsburg-based VW, the world's fourth-largest carmaker, plans to propose the move to the Malaysian government, the source told Reuters at the Frankfurt International Motor Show on Wednesday.

The idea is for the Malaysian government gradually to pull out while taking on any losses during a starting phase, the source said, adding that the Volkswagen stake could be increased to 50 percent within five years.

The German carmaker has long been interested in strengthening its position in Southeast Asia. Last week it said it had arranged high-level talks in coming weeks on further steps towards linking up with Proton.

The Malaysian firm, which faces a shrinking market share in an increasingly competitive domestic market, wants to tie up with a global carmaker to boost its sales and turn itself around.

It expects to return to profit this financial year, helped by the launch of a new car that will replace its most successful model, the 14-year-old 'Wira' sedan.

Proton, set up in 1983 by former Prime Minister Mahathir Mohamad, was for a long time state-protected due to affirmative action policies aimed at giving the country's ethnic Malays business and employment, and at one point it sold more than half of all new cars in Malaysia.

But since barriers to competition started coming down, Proton has lost market share, not just to international rivals but also to domestic carmaker Perodua.

Last November, the government announced it had decided to consider giving approval for VW to take a controlling stake in Proton's manufacturing operations.

The Malaysian government has also held talks with VW rivals PSA Peugeot Citroen of France and General Motors of the United States.

 

This 'dilly dallying' cant be great for Proton's financial woes, which dont seem to get as much press as I envisaged.

Thanks Atmos for the update

 

Volkswagen CEO to visit Malaysia for Proton talks


Reuters
September 24, 2007 -- 14:00 CET



HANOVER, Germany (Reuters) --> Volkswagen CEO Martin Winterkorn plans to visit Malaysia in the weeks ahead to discuss striking a deal with state-owned carmaker Proton, a Volkswagen spokesman said today.

Winterkorn will meet Prime Minister Abdullah Ahmad Badawi to discuss the framework for Europe's biggest automaker to take a stake in loss-making Proton. An exact date for the meeting was not yet set, the spokesman said, confirming a report in Malasian weekly the Edge.

The Malaysian government has been in talks with Volkswagen, the world's fourth-largest carmaker, over the possible sale of a stake in Proton.

A person familiar with the talks told Reuters this month that Volkswagen wants to take a 20 percent stake in Proton and could increase its share to a majority.

The idea is for the Malaysian government gradually to pull out while taking on any losses during a starting phase, the source said, adding that the Volkswagen stake could be increased to 50 percent within five years.

The German carmaker has long been interested in strengthening its position in southeast Asia.

Proton, which faces a shrinking market share in an increasingly competitive domestic market, wants to tie up with a global carmaker to boost its sales and turn itself around. It expects to return to profit this financial year.

SOURCE: Automotive News