Volkswagen AG and Proton agree long-term strategic partnership

Volkswagen AG and the Malaysian carmaker Proton Holdings Berhad have agreed to enter into a long-term strategic partnership. High ranking Representatives of the two companies signed a Memorandum of Understanding on Tuesday at Volkswagen head office in Wolfsburg.

Currently, there are no plans for Volkswagen AG to take a shareholding in Proton. The agreement stipulates that both parties will retain their full corporate independence. The collaboration will enable Volkswagen to establish a base for servicing the markets of the ASEAN region, without having to make extensive capital investments in the region. The primary aim is to build up an automobile industry of global market standard in Malaysia, exporting to other countries in the region as well as supplying the local market. Opportunities for joint vehicle development will also be closely examined.

As a first step, Volkswagen AG and Proton have agreed to begin preparations for the assembly of kits of two models. The collaboration will initially involve only the Volkswagen brand. The goal is to launch the first models assembled in Malaysia into the local market by the end of 2005. The initial sales target for 2006 is to top 15,000 units. A key factor in the strong growth prospects is that Proton already operates an efficient dealership network that can be utilised at least in part for sales of Volkswagen vehicles. At the same time the aim is also to build up the supply industry in Malaysia, enabling some of the parts required to be procured from local manufacturing sources.