Shareholders in Malaysia’s top car maker Proton have reportedly approved a corporate shake-up, clearing the way for possible partnerships to boost its competitiveness in domestic and global markets.
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Proton chief executive officer, Tengku Mahaleel Tengku Ariff, told Reuters the firm was in talks to form strategic alliances with a couple of foreign car makers, but declined to name them.
Helped by two decades of special tax privileges, Proton has about half of Malaysia’s mid-ranged passenger car market but has suffered lately as rivals such as Honda and Toyota slashed prices to break its dominance in the lucrative sector, the news agency noted.
Citing data from the data from the Malaysian Automotive Association, Reuters said that price discounts of its own failed to stop state-controlled Proton’s market share falling to 49% with sales of 155,420 units in 2003, compared with a 60% share or 214,373 units in 2002.
Analysts reportedly said Proton had to wean itself from tax protection and improve its ageing model lineup, low-quality components and over-staffing.
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By GlobalDataReuters noted that, in 2000, Malaysia said it would look for a possible foreign partner for Proton but found no takers at that time though Ford and DaimlerChrysler were rumoured to be potential partners.
The firm, which has a market capitalisation of five billion ringgit ($1.3 billion), is 49% owned by government-linked investors while Mitsubishi Motors has 15.9%, the report added.
Proton chairman Abu Hassan Kendut reportedly said a corporate revamp announced last May was expected to be complete by April, when its listing status would be transferred to Proton Holdings Bhd, a new investment holding firm.
According to Reuters, CEO Tengku Mahaleel also denied media reports Proton might follow rivals, which are expected to hike prices by as much as 10% following new tariffs announced by the government at the end of last year.
“You must remember our job is to make prices of cars more affordable,” he reportedly said.
Reuters said that prime minister Abdullah Ahmad Badawi cut import taxes while raising excise duties to 60-100% at the end of last year, a move towards full compliance with trade rules agreed under a regional pact.
Malaysia, Southeast Asia’s second largest car market, has to reduce tariffs to between 0 and 5% by 2005 under the ASEAN free trade agreement, the news agency noted.
