OCTOBER 29, 2004
VW and Proton
Volkswagen AG and the Malaysian car maker Proton have agreed a long-term strategic partnership which will result in VW building cars in Proton's factories in Malaysia. There are no plans for any equity involvement between the two firms. The big question is whether or not Proton will continue to build its own cars or whether the deal will ultimately mean that the firm becomes a VW sub-contractor. If this is the case it will be a blow for the long-term plan of former Malaysian premier Dr. Mahathir Mohamad who argued that the country should have its own automobile industry. A deal with VW would be a good compromise for Mahathir's successors as it would still enable the country to have a strong shareholding in Proton; the partnership stipulates that both parties will retain their full corporate independence. The automobile industry exporting to other countries in the region as well as providing for the Malaysian market.
It will be interesting to see if there will be any side-effects of the deal in the long term either with racing programmes between the two firms or whether the compromise in Malaysian attitudes will be reflected in similar compromise when it comes to Grand Prix racing, a costly business for the Malaysian government.
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