Proton seeks foreign tie-ups

Proton seeks foreign tie-ups

Agence France-Presse, Kuala Lumpur

Malaysian carmaker Proton said on Wednesday it was in talks with several foreign parties about possible alliances after shareholders approved a major restructuring plan to gear up for competition under a regional free trade pact.

Chief executive Mahaleel Ariff said Proton's shareholders gave their full support to the revamp that would pave the way for the company to enter new tie-ups after a parent company is set up ahead of Malaysia's entry to the Association of Southeast Asian Nations (ASEAN) Free Trade Area (AFTA).

The new company is expected to take over Proton's listing status by the first week of April and will streamline businesses into five core sectors: manufacturing, marketing, engineering services, property and financial services.

Following the restructuring, Proton is talking with a "couple of foreign parties but unfortunately because of confidentiality, we can't name them," Mahaleel was quoted as saying by Bernama news agency.

He said Proton would unveil a new model powered by its own Campro engine early next month. The car is produced with 90 percent local content and this allows Proton to price it competitively, he said.

Mahaleel denied reports Proton car prices would be raised by between two and five percent because of higher duties under a new motor tariff structure from Jan. 1.

As a national carmaker, he said it was Proton's duty to produce affordable cars.

He said prices of some models have fallen recently such as the Perdana by about 6,000 ringgits (US$1,579) to 97,000 ringgits, the Wira by about 5,000 ringgits to 49,000 ringgits and the Iswara by about 3,000 ringgits to 34,000 ringgits.

He said all current prices would remain unless the market condition changes.

"If market changes for the worst, we may react and if the market changes for the better, we may raise the prices," he said, adding Proton was in talks with the government to ensure the new tax structure would not burden the public.

In a statement later, Proton said it was "currently studying the new tariff structure in depth before announcing any new pricing for our models.

"At this stage, no price increase has been set by Proton," it added.

Proton, set up in 1985 as part of Malaysia's move into heavy industry, is pinning hopes on three new models to be released this year to revive sales after its market share tumbled to 49 percent last year from 60 percent in 2002.

Proton car sales fell by a sharp 27.5 percent to 155,420 units last year.

The carmaker, which has been protected by high import tariffs and other advantages that will disappear under AFTA, has sought another 20 years of tariff protection but the government has kept silent on its request.

Under AFTA, import tariffs for most products in the region were cut to below five percent from last year. Malaysia obtained a two-year reprieve for its auto industry until 2005 but it recently said it would further defer reducing duties to the required level until 2008.