Mirage77

HONG KONG (MarketWatch) - Europe's largest automaker, Volkswagen AG, is holding talks with several groups to secure an assembly plant in Southeast Asia as part of an expansion plan to keep up with booming demand in the region, according to media reports Friday.

Volkswagen Group Malaysia Managing Director Axel Barth said discussions were ongoing with several parties, but refused to give details, a Malaysian daily newspaper, the Star, reported in its online edition.

Barth said the threshold for a tie-up with local partners would be markets in which annual sales exceeded 1,000 vehicles, Associated Press said, citing a story in the online edition of New Straits Times.

He said after identifying a partner it could take up to two years before vehicle production gets underway, according to the AP report. Earlier this year, Volkswagen rejected a possible tie-up with Malaysian national carmaker Proton after the groups were unable to resolve issues of management control, according to the AP story.

European automakers are attracted to Proton because it has spare capacity to build cars and it gives them a chance to break into Southeast Asia's growing auto market, historically dominated by Japanese rivals, according to AP.

Talks between the automakers were restarted after the Malaysian government said last month it would consider letting Volkswagen take a majority stake in Proton's manufacturing operations, AP reported. The proposed ownership arrangement would enable Proton control over sales and distribution while Volkswagen could have access to Proton's assembly lines, the report said.

Malaysia's state investment arm Khazanah Nasional owns 43% of Proton, according to AP. The Malaysian automaker reported a loss of $69.5 million in the quarter ending Sept. 30.

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Curb Zone

 

phaeton

Won't happen if VW buys into Proton, Proton announced that its long term partner will announced early next year.

Mirage77

Yup - I have a good feeling Proton will be in partnership with VW, after all. After giving it some thought I realised it would be fantastic for VW, as long as they keep production of SEA-made cars strictly for producing VW-engineered Protons only. The VWs sold should still be imported from Germany, IMO.

phaeton

I believe VW will produce VW cars in ASEAN whethers it by Proton or someone else and don't think quality will be down, VW will be strict on quality control

Passat & a small car will be most likely produced for ASEAN market, infact VW/AUDI had a private firm producing in Thailand for a while, firm was called Yontrakit (I think).

Curb Zone