Malaysia May Give VW A Controlling Stake In Proton

KUALA LUMPUR, Malaysia (AP) - Malaysia is currently considering a proposal from VolkswagenAG to allow the company a controlling stake in national car maker Proton Holding’s manufacturing operations, the government said Thursday.

Prime Minister Abdullah Ahmad Badawi said letting Volkswagen own 51 percent of Proton's manufacturing operations is one option under consideration, but no decision has been made.

Company officials from Proton and Volkswagen could not immediately be reached for comment.

Proton was ditched as a possible equity partner early this year by Volkswagen after the Malaysians refused to relinquish management control.  Volkswagen is now believed to want to purchase a controlling stake in Proton's manufacturing operations, instead of the holding company.

Through this arrangement, the Malaysian company would control sales and distribution, while Volkswagen can access Proton's assembly lines.

Proton is struggling to remain profitable and is fast losing its market share to local and foreign car makers. It also has spare capacity that a foreign automaker can use to build cars for the Southeast Asian market.