A report from AP says that Volkswagen AG may conduct a due diligence audit on Proton as discussions on a possible tie-up including stake transfer progresses further. Recent newspaper reports have suggested that Volkswagen is the forerunner in the bid to partner with Proton. Volkswagen’s possible 51% purchase into Proton’s manufacturing unit is said to be worth RM 2 billion ringgit, which will result in Proton gaining knowledge through tech transfers as well as a capital injection. Initially, Volkswagen might use Tanjung Malim to assemble the Volkswagen Passat model for the Japan market, taking advantage of Malaysia’s free trade agreement with Japan.

This will result in Volkswagen holding Proton’s manufacturing unit shares, but what is to happen to the government’s 43% stake in the main company Proton Holdings Bhd? This might be where the local partner comes in, a company like DRB-HICOM or Naza could purchase part or all of this stake from the government. Volkswagen is said to have the edge over PSA Peugeot-Citroen because PSA Peugeot-Citroen is interested in a partnership that could involve sales and joint model development collaboration but it did not want to involve a stake transfer.

Sources: IHT, Bernama

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