Mitsubishi Motors Corporation (MMC) has signed a deal with Malaysia's Proton Holdings for the development of a new Proton vehicle. The contract also grants a licence to the Malaysian automaker to manufacture a new Mitsubishi vehicle based product.

"Through this and other collaboration projects in the fields of development and production, MMC aims to expand its Malaysian business beyond the current export shipments of built-up cars from Japan to that nation," a statement from the Japanese giant said.

For its part, Proton aims to work with MMC to expand its model lineup as well as to raise quality levels and make more effective use of its production plant.

The two companies are also continuing to study other mutually beneficial avenues of collaboration, the statement added.

Proton aims to be manufacturing the new model from 2010.

Mitsubishi Motors already supplies Proton with auto parts like engines and transmissions.

Mitsubishi helped set up Proton over two decades ago, but sold its stake in 2004.