Volkswagen Set to Purchase Controlling Stake of Malaysia’s Proton

Passat Photos

Even though Proton has separated from previous partner Mitsubishi, products like the Gen.2 hatchback haven't given the brand the success it needs. (Photo: Proton)

The Proton Savvy, described as "My First Lotus"... Somehow VW doesn't see it that way. (Photo: Proton)

VW's consideration has more to do with Proton's facilities than its cars, such as this brand new Satria Neo hatchback. (Photo: Proton)

In the ’90s, the state-owned Malaysian automaker Proton was a giant in itshome country. Selling rebadged Mitsubishis and Citroens, it earned national pride and put a great number of Malaysians on wheels. Since then, things have changed. Shifts in politics, such as trade agreements, saw Proton lose a vast portion of its market share to other automakers like Toyota, and despite producing its own cars for the first time - Gen.2, Satria - the brand will most likely collapse if it doesn’t find a partner. Over the most recent quarter, Proton reported a loss of 262 million MYR (Malaysian Ringgits) or $75 million USD, which doesn’t seem like much, but for this tiny firm it’s massive.

Quite a few automakers have been eyeing up Proton, with key players including Volkswagen, PSA-Peugeot-Citroen and General Motors. China’s Chery and India’s Mahindra are reportedly also interested. However, on the 26th of January, it was revealed that Volkswagen would most likely become the majority shareholder, and is about to undertake an audit of the Malaysian automaker. It is expected to pay $500 million USD for 51 percentof the voting rights in Proton’s manufacturing arm. VW beat out runner up PSA group, as PSA was interested in finding a development partner, as opposed to a company to take completely take over.

VW seems to be primarily interested in Proton’s manufacturing facilities. One plan that’s often brought up is for Volkswagen to begin assembling Passats in Malaysia for the Malaysian and Japanese markets. Currently, Malaysia has a free-trade agreement with Japan, which would help shave big bucks off the price tag of its midsize sedan, further expanding its market share in the lucrative Japanese market. And in terms of politics, Malaysia is also negotiating free trade agreements with the U.S. and Australia, two big markets that would really play in Volkswagen’s favour.

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