Proton will assemble Volkswagens for sale in Southeast Asia
Proton will assemble Volkswagens for sale in Southeast Asia
Associated Press Kuala Lumpur
Malaysian carmaker Proton says two Volkswagen models it will assemble under a new deal will be sold in other Southeast Asian countries under the region's free trade area agreement.
Proton said in a statement late on Tuesday that Volkswagen will assist it in quickly reaching the German automaker's quality standards in assembling the yet-to-be-announced models.
Under the deal, Proton, which has a dominant share of the domestic market, is set to begin assembly of the two models late next year.
Volkswagen has said it expects sales to top 15,000 units in 2006 from a few thousand now. No other details have been released.
The statement said the two cars will have enough local content to allow them to be sold under the Association of Southeast Asian Nations Free Trade Area, or AFTA, agreement.
It stipulates that items sold under the trade regime must carry at least 40 percent local content.
"It is also the intention to quickly localize and make these vehicles eligible for qualification of ASEAN content for re- exports to ASEAN countries," Proton's statement said.
The move to sell Volkswagen cars under AFTA is likely to irk Malaysia's competitors Thailand and Indonesia -- the two largest assemblers in the region of foreign cars such as Toyota, Honda, Mazda, Ford and General Motors.
Both countries complain that they can't sell their products in Malaysia because of the government's protectionist policy. Malaysia imposes a 100 percent excise tax on foreign cars, forcing people to buy the state-owned Protons.
The statement said the Proton-Volkswagen deal implies a longer-term, exclusive partnership with neither company opening discussions with a competitor without prior consultation.
When the deal was announced last week, some analysts expressed concern that a lack of equity participation by Volkswagen in Proton would likely hamper the transfer of needed technology to the Malaysian company.
Without an equity stake, Volkswagen would have little commitment to share its technology, analysts said.
Addressing those concerns, the statement said Volkswagen will study the technical feasibility of supplying Proton with engines and transmissions for its new products, so that "wider domestic, ASEAN, and global markets" can be served.
It did not say how long the study would take.