Proton Confirms End To Volkswagen Partnership Talks

Malaysia's state-owned carmaker Proton has confirmed that recent partnership talks with Volkswagen have failed, with the German carmaker committed to "other priorities".

A statement issued by Proton this week said that while an alliance with Volkswagen would have been "interesting," it acknowledged Volkswagen's reasons for not proceeding.

"During preliminary talks between the parties, Volkswagen confirmed that it currently has other priorities and that a potential collaboration with Proton could not be pursued," a Proton spokesperson said.

A potential partnership between the two companies has been mooted before, with Volkswagen known to be seeking a stronger foothold in South East Asia, and Proton eager to establish ties with a strong international company.

“Talks that might have been taking place recently have not proceeded anymore and there will not be further talks,” a Volkswagen spokesperson told industry paper Automotive News today.

This latest failure marks the second time the two companies have been unable to reach an agreement in partnership talks, the first occurring in 2007.

Even without strong international sales, Proton is expected to survive in its home market, although margins will likely be low and the opportunity for new model development will be hard to come by.

Total production up to March 2010 from the previous year was 184,000 vehicles, with 86 percent sold in Malaysia.

How Proton's current financial situation will affect its ownership of British sports car brand Lotus remains to be seen, although the topic of selling it off will likely come up in Proton's boardroom discussions.

In Australia, Proton is expected to launch its Exora MPV later this year, powered by 1.6 litre petrol engine developing 93kW and 150Nm of torque - while weighing in at 1422kg.