VW in Takeover Talks With Malaysia's Proton
Date Posted 07-06-2005

KUALA LUMPUR, Malaysia ? Despite the scandals that have rocked the company, Volkswagen is preparing to make its biggest acquisition since it bought Skoda 15 years ago.

The target is Malaysia's state-controlled automaker Proton. Discussions between the two companies were confirmed this week by Malaysia's former prime minister Mahathir Mohammed, an adviser to Proton. "If we want to, we can sell more than 50 percent to Volkswagen," he said. "They are quite willing, I think, to buy even 100 percent."

Proton has struggled to establish itself as a global player, despite exports to Europe for more than a decade and the acquisition of UK sports-car maker Lotus. And it faces an uncertain future after 2008, when Malaysia opens its protected market to foreign competition. Currently imported cars are subject to tariffs of 300 percent.

Mahathir said "many other companies" would be interested in Proton, but the biggest fear was that if they took over the firm, they might end production of Protons and assemble their own cars instead. VW has already announced plans to assemble the Passat sedan in Malaysia this year with Proton, and the subcompact Fox from 2006.

What this means to you: It's a little complex, but this could bring a cheap option to VW fans.

A cheaper VW, sounds good until you think about it.

VW has enough problems with their 20-40K cars, i can't imagine how well a 10-15K car would hold up. Hyundai has the small cheap car market pretty much wrapped up.

300% import tax? no wonder i saw so many protons in malasyia.