Thursday, September 15, 2011

Proton, Mitsubish mulls joint production of engines in Malaysia

SUBANG JAYA: PROTON HOLDINGS BHD [] and Japan's Mitsubishi Motors Corporation (MMC) are considering joint production of engines in Malaysia and production of MMC-brand vehicles at Proton's plants under their proposed strategic collaboration.

Confirming The Edge FinancialDaily report on Thursday, Sept 15 about the broad ranging strategic collaboration, they said in a joint statement they are in 'serious collaboration' to enhance their competitiveness in the global market place.

Other areas of collaboration are major parts and components between MMC's 'Global Small' -- to be launched next March in Thailand ' and Proton's upcoming 'Global Small Car'. Also included would be MMC's future technologies that include electric, plug-in hybrid and hybrid vehicle TECHNOLOGY [].

Details regarding the collaboration will be finalised within the next two months.

To recap, since late 2010, the two companies had jointly proceeded with feasibility studies to identify certain areas of collaboration that could be expected to benefit both parties.

The Edge FD reported that both car makers were close to signing a working agreement which would entail MMC utilising Proton's production facility in Tanjung Malim, Perak. It also reported the tie-up would give Mitsubishi access to Proton's plant in Tanjung Malim for export to the Asean region.

The news report said both car manufacturers are looking to form a joint-venture (JV) company to manufacture small vehicles in which both parties would have equity stakes. The precise shareholding structure of the JV entity is currently uncertain but Proton is believed to be taking up a controlling stake.

Proton chairman, Datuk Seri Mohd Nadzmi Mohd Salleh told reporters at a press conference after the AGM on Thursday that:

"The perception in the past is that you must be bought over by a group of companies to stay afloat. There are many business models that can be utilised to keep a business afloat, not just via acquisitions and equity swaps.'' We want to prove to everyone that by collaborating, a company can benefit and keep itself successful.

'For a small car manufacturer the economy of scale is very important, the quality and branding is very important. So if we can achieve this kind of collaboration, it still serves a purpose of enhancing the business of Proton moving forward.'

Proton managing director Datuk Seri Syed Zainal Abidin said the collaboration would definitely boost sales and revenue of Proton automobiles.

Asked about the possible benefits to Proton in terms of revenue and marginal profits, he replied:

"I'm sure it will increase the revenue but point of it first is we need to finalize. It will definitely increase our revenue, it will definitely increase our margins and more important we need to utilise our capacity."


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