VW Looking Into Asian Plant

Company is in talks with several groups to establish plant in Southeast Asia market.

KUALA LUMPAR, Malaysia (AP) – Volkswagen AG, Europe’s biggest car maker, is in talks with several parties to secure an assembly plant in Southeast Asia to meet growing demand and strengthen its foothold in the region, reports said Friday.

VW Group Malaysia managing director Axel Barth was quoted by The Star as saying “Talks with several parties were ongoing” to get a place for local assembly in the region but declined to give details.

He refused to comment about a possible tie-up with Malaysian national carmaker Proton.

“It is very urgent as we are under-represented” in Southeast Asia, he said in the report. “We feel there are good opportunities here and whenever we have a local assembly, we can have a reasonable market share.”

Barth was quoted by the New Straits Times as saying there must be a minimum annual sales of 1,000 cars for VW to consider a tie-up for local assembly. After identifying a partner, he said it could take up to two years before local assembly can begin.

Volkswagen ditched Proton as a possible equity partner early this year after the Malaysians refused to relinquish management control.

But talks were revived after Malaysian Prime Minister Abdullah Ahmad Badwai last month confirmed the government would now consider letting VW own 51 percent of Proton’s manufacturing operations.

Allowing Volkswagen to buy a controlling stake in Proton’s manufacturing operations, instead of Proton’s holding company, would enable Proton to control sales and distribution while Volkswagen can access Proton’s assembly lines.

France’s Peugeot SA and local car company Naza Group were other parties interested in an alliance with the beleaguered Proton, which is expected to name a partner early next year.

Government investment arm Khazanah Nasional owns 43 percent of Proton, which is fast losing its market share to local and foreign rivals due to high costs, sagging sales and a lack of new models.

Proton’s second quarter losses widened 62 percent on-year to $69.5 million in the quarter ending Sept. 30.

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.

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