Malaysian-French car revs into local market

Malaysian-French car revs into local market

KUALA LUMPUR (AFP): A Malaysian-French car jointly produced by
France's PSA Peugeot-Citroen and two local partners is expected
to capture a healthy segment of the buoyant domestic car market,
analysts said.

The new Citroen AX variant, launched here Friday as the Proton
Tiara, will fill a market niche with its 1.1-liter engine, they
said.

"We think it will go over very well," said Anne Thompson, an
analyst with Pesaka Jardine Fleming Sdn. Bhd.

The car is manufactured in collaboration with Malaysian
national carmaker Perusahaan Otomobil Nasional (Proton) Bhd. and
Diversified Resources Bhd. (DRB), jointly known as Usahasama
Proton-DRB (USPD) Sdn. Bhd.

The Tiara will be marketed by USPD and is expected to retail
for under 38, 000 ringgit (US$15,200).

This would put it smack in between its nearest competitors:
the 660cc Perodua Kancil, manufactured by Malaysia's second
national car firm Perusahaan Otomobil Kedua (Perodua), priced at
around 30,000 ringgit, and Proton's 1.3-liter Iswara model,
costing just under 40,000 ringgit.

PSA Peugeot-Citroen has no equity stake in the collaboration
and will receive fees and royalties from car sales.

Analysts said novelty appeal would be a major draw for the
locally-made car with French design and technology, since both
Proton and Perodua previously relied on Japanese expertise.

Some 600 to 700 units of the 1.1-liter Proton Tiara will be
produced in the first two months, with production raised to 2,000
units by August, officials said.

Two other models planned for production are Citroen's 1.4-
liter petrol engine and 1.5-liter diesel engine.

The partnership with PSA Peugeot-Citroen is seen as a way to
lessen Malaysia's dependence on Japan's Mitsubishi, which
provided Proton with the know-how to spearhead the first
Malaysian car in 1985, analysts said.

Malaysia has complained that the Japanese auto giant was slow
in transferring engine-manufacturing technology.

But analysts warned the switch to a French partner did not
necessarily mean easier transfer of technology.

"I'm not so sure France is any more willing to impart
technology," said an analyst with a foreign house, adding: "That
is left to be seen."

Among local partners, DRB was most likely to benefit if Tiara
sales went well, analysts said.

Proton would also benefit, but it could be hurt elsewhere if
the Tiara took away sales from the more-dated Iswara, they said.

Tiara sales are also expected to be boosted by a local car
market where demand, boosted by nine years of strong economic
growth, often exceeds supply.

Vehicle sales surged 42.6 percent last year to a record
285,792 units.

With imported vehicle prices artificially inflated by hefty
import duties, locally-made cars led the market. Proton models
had a market share of 62.5 percent, or 110,505 units last year
while Perodua accounted for 17.7 percent, or 39.906 cars.