After months of discussions and press rumours, PSA and Proton have a signed a letter of intent, which will allow them to study possible cooperation between the two manufacturers.

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In an official statement, PSA said that the study, which is expected to last several months, will focus on a number of diverse areas such as product development, manufacturing, quality initiatives, vendor development, contract assembly and distribution.


The areas being studied will focus on offering benefits to both parties in the ASEAN region and elsewhere.


The study has a number of objectives with Proton’s goal being to leverage the technological expertise of a major global automobile manufacturer in areas such as product development and quality improvement while at the same time optimising the capacity utilisation of its plants.


For PSA, the agreement is expected to increase sales of Peugeot and Citroën vehicles in Malaysia and serve as a foundation for developing business in the ASEAN region. It is in line with the group’s strategy of creating dedicated co-operations with other car manufacturers.

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PSA already has an engine development and manufacturing venture with Ford and also shares the development and manufacture of several ranges of MPV (minivan) and commercial vehicles with the Fiat group.


PSA told Reuters in May that it was in talks with Proton. There have also been rumours in the Malaysian press that the companies might be considering a wider alliance, which would include Mitsubishi.


Mitsubishi was the first automaker to license vehicle technology to Proton in the 1980s and the first Proton models made in Malaysia in the mid-80s were based on the Japanese automaker’s compact Colt hatchback and Lancer sedan lines.


Also in May, Malaysia’s prime minister said that Proton needed to find a foreign partner to be able to compete without government support. However, he also said that potential foreign partners would have to accept they would not gain control of Proton, which has benefited from state aid and protective tariffs since its launch in 1984.