Proton’s talks with Volkswagen are still on-going while analysts ponder over the possible outcomes.

The Government will not give up the 42.7% stake that it has in Proton through it’s investment arm Khazanah Nasional Bhd. So where will the shares that Volkswagen will buy come from?

Analysts say one option would be to issue new shares to Volkswagen. Another way was something similiar to what Perodua did when Daihatsu of Japan took up stake in the company a few years back. Perodua sold a major stake to Daihatsu which comprised of it’s manufacturing division.

This way, Volkswagen would have control over the manufacturing division while Proton would still maintain full ownership of distribution division Proton Edar to maintain identity as the national car project.

Ultimately a positive outcome would do wonders for Proton’s manufacturing division because of the larger economies of scale with Volkswagen cars.