Volkswagen mulls over the expansion of production in Malaysia. It has sent senior executives, including management board members, to study the operations of Proton Holdings for a possible partnership, a person familiar with the matter has disclosed. The largest automaker in Europe is studying the potential of manufacturing automobiles at Proton plants after its partner DRB-Hicom concurred last month to purchase 43 percent of the Malaysian company, said the insider want anonymity due to the confidentiality of the discussions.
The insider further disclosed that the executives are studying whether the facilities are fit to build VW models, as the company is thinking about creating a production hub in Malaysia. In this way, it can target Southeast Asian markets.
Analyst Ahmad Maghfur Usman at OSK Holdings commented that Volkswagen is expanding because it has yet to have "big presence" in Southeast Asia. He further stated that the company can start developing its market share in countries like Thailand and Indonesia.
In the past, Volkswagen has considered a Proton partnership in June 2010. But it called off cooperation meetings with Proton, after the two companies were unable to reach a deal in November 2007 after a year of negotiations.
The company has stated that it "continually" studies local market opportunities. It added that the Malaysian market in general is of "high importance" to the Volkswagen Group. DRB's Managing Director Mohd Khamil Jamil was not available for comment.
Selangor-based Proton was established in 1983 by Malaysia's former Prime Minister Mahathir Mohamad in order to steer the country's industrialization plan. The automaker is headed for its second year of profit declines as it goes up against rivals, including Toyota. [source: Autonews]