Honda ties up with Malaysia's Proton

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IOL mot pic oct30 Honda Proton Tie-up Reuters A worker inspects cars at a Proton assembly plant in Shah Alam near Kuala Lumpur. Proton has a reputation for unimaginative models and poor quality.

Malaysian carmaker Proton and Japan's Honda have agreed to explore a cooperative partnership in troubled Proton's latest attempt at revival through a foreign tie-up.

Proton's parent DRB-Hicom said on Monday the two companies would discuss collaboration in “technology enhancement, new product line-up, platform and facilities-sharing”.

“This collaboration will provide positive impact to Proton and the DRB-Hicom Group in the long run,” it added, but gave no further details of the proposed cooperation.

A Honda spokeswoman in Tokyo said the companies had agreed to seek “possible collaboration” but no specific steps had been decided upon.

Proton was formed in 1983 as part of a plan to jump-start a national industrialisation programme.

But it has suffered from weak sales and a reputation for unimaginative models and poor quality, and has struggled to stay competitive and penetrate global markets.

Early this year DRB-Hicom, a leading car distributor and importer, bought state investment arm Khazanah Nasional's stake in Proton.

Khazanah said it sold out as part of an attempt to increase the carmaker's prospects amid growing competition from Japanese, European and Korean carmakers in the Malaysian market.

Honda, Japan's third-largest auto manufacturer, has troubles of its own.

It recently cut its sales target in China, the world's largest auto market, as consumers shun Japanese brands due to a territorial row between the two Asian powers over a group of islands.

The statement to the Malaysian stock exchange said the agreement with a “strong and renowned global automotive player like Honda” would provide growth opportunities for Proton.

The partnership will not involve an equity stake.

As a result, Malaysian Brokerage firm TA Securities said the collaboration could bring Proton only limited benefits.

“At this juncture, without Honda taking equity in Proton, we see little value added to Proton in terms of technology transfer and development of new products via this collaboration arrangement,” it said.

DRB-Hicom assembles Honda models at its plant in Malaysia.

Previous negotiations to sell stakes in Proton to Volkswagen and General Motors fell apart because of the Malaysian government's desire to keep the company domestically-owned.

Proton also owns loss-making British-based sports car company Lotus. - AFP

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