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October 19, 2004

MALAYSIA: Proton to decide on Volkswagen tie-up by year’s end

Proton will decide by the end of the year whether to form a strategic partnership with Volkswagen, former Prime Minister Mahathir Mohamad said on Tuesday, according to the Associated Press (AP).

By bcusack

Proton will decide by the end of the year whether to form a strategic partnership with Volkswagen, former Prime Minister Mahathir Mohamad said on Tuesday, according to the Associated Press (AP).

Mahathir – who is Proton’s adviser – reportedly noted that Malaysia’s national carmaker remained in talks with other potential partners and was still open to other offers, but negotiations with Volkswagen “have gone on much further than many others.”

“There is no period, no limit of time that it takes, but of course we have to make a decision,” Mahathir said in an interview with Dow Jones Newswires cited by AP. “If it does look to be VW, it will be before the end of this year.”

AP noted that Proton has sought a new partner since Mitsubishi Motors – deeply involved in Proton’s technological development since its founding in the 1980s – sold a 7.93% stake.

Mahathir, who was appointed as Proton’s special adviser after he retired last October, reportedly did not rule out some form of equity participation in a potential tie-up.

AP said that Volkswagen has lagged behind other foreign automakers in tapping into the Southeast Asian market, where many of its competitors have established plants in Thailand over the past decade.

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