Volkswagen and DRB-HICOM, one of Malaysia’s largest car distributors and importers, have formed a venture to assemble and manufacture cars in the Asian country, local reports said at the weekend.
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Volkswagen on Friday signed an agreement with DRB-HICOM to assemble VW vehicles at a manufacturing facility in Pekan, in the central state of Pahang, the Edge business newspaper said.
The announcement comes after national carmaker Proton in June said it had scrapped alliance talks with the German company, a move expected to dent Proton’s attempts to secure export markets, news agency AFP noted.
DRB’s group managing director Mohamad Khamil Jamil said DRB-HICOM hoped that the entry of Volkswagen into Pekan would help it to become a regional automotive hub.
“This memorandum of understanding is the culmination of intense discussions and both parties anticipate the [assembly] of models [supplied in complete knock down (CKD) kit form] in Malaysia,” he added.
Malaysian VW assembly is expected to start in 2012.
Pekan is DRB-HICOM’s largest automotive manufacturing facility in Malaysia. The company also assembles Honda and Mercedes-Benz cars.
Proton has been searching for a collaborator in a bid to break into foreign markets and develop attractive models to compete with growing competition from Japanese, European and Korean carmakers in its domestic market.
It was formed in 1983 by then-premier Mahathir Mohamad as part of an ambitious national industrialisation plan. But it has suffered from a reputation for unimaginative models and poor quality.
