Talks between Proton and Volkswagen stalled

Talks between Proton and Volkswagen AG have been stalled due to a disagreement between Volkswagen and Proton top management on the amount of equity which Volkswagen wished to take in the company.

Volkswagen’s stake in Proton would offer tremendous benefit to Proton as Volkswagen would be able to offer Proton technical expertise and global market reach.

However some technical details could not be ironed out so details on how much equity Volkswagen is going to take remains hanging at the moment.

Volkswagen was reported to be interested in a significant interest, not taking over the whole Proton group altogether. Even though Khazanah Nasional which has a 42.7 percent stake in Proton agreed to the idea, Proton management, led by Tengku Mahaleel Ariff opposed to the amount of equity Volkswagen wished to take. They agreed to Volkswagen taking up the equity but they wanted it to be significantly less than proposed.

Even as it is, the proposal would not result in Volkswagen becoming a majority shareholder or taking over control of Proton. I don’t know why Mahaleel and his team would oppose to this.

How ironic, when Proton’s advisor Tun Dr. Mahathir was reported to say this to the press in a report by The Edge.

‘We have no problem in Volkwagen buying shares in Proton. If we want to, we can sell more than 50% to Volkswagen. They are quite willing, I think, to buy even 100%.

I suppose the keyword here is “if we want to”, which in this case Proton does not want to.

Sources: AFX via Forbes, Associated Press via Forbes

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Paul Tan

After dabbling for years in the IT industry, Paul Tan initially began this site as a general blog covering various topics of personal interest. With an increasing number of readers paying rapt attention to the motoring stories, one thing led to another and the rest, as they say, is history.



  • awok2k on Jul 18, 2005 at 7:55 am

    I think governemnt is just try to buy more time to delay the increasing of local car manufacturer tax.

    Potong is having trouble with their pass few "Comrades"

    Mitsubishi :

    Heard that recently in Japan, their shares dropped like mad due to incidents of engine caught fire, and trucks wheels flies off and kill 1 school boy.

    Renorld :

    Parts expensive,

    Now, I think that's why they are trying to get along with Volks. Frankly speaking, not many Foreign Car Manufacturer likes to partner with Proton. Too much restrictions.

    Just my thoughts.

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  • eAthena-Seir3n on Jul 18, 2005 at 9:01 am

    Umm.. is it Renault? Or am I mistaken?

    Well , VW having share in Proton is always a positive thought to improve Proton's QC and maybe design. Hope it can bring more benefit than Proton bringing Lotus in. (Seems to me they don't benefit much from Lotus =.=..Maybe a BIT)

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  • akari on Jul 18, 2005 at 10:38 am

    Mahaleel again =.=

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  • cbljkkj on Jul 18, 2005 at 2:27 pm

    I think it's about time Proton was bought over.The technology and expertise that can be inputted in to Proton by VW would be most beneficiary.These deals dont't come around every weekend.

    IMHO, VW would still be thinking twice of commiting to take over Proton.Dr Sri Datuk Mahathir Mohammed made a very wise choice of stating that if VW wanted to purchase 100% of Proton so be it.It's not that Proton hasn't been providing us cars for 20 years but because of the current management who has sacrificed quality for quantity leaving stockyards of Protons full and selling overpriced vehicles.

    I personally symphatise with Dr Sri Datuk Mahathir Mohammed for bringing in a foray of automobile revolution and leaving it to numbskulls who destroyed the hardwork and effort put into it after 20 years.

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  • AlexC on Jul 18, 2005 at 3:54 pm

    Dear eAthena-Seir3n,

    I think Proton benefited much actually by acquiring Lotus… they get some marketing edge by putting on 'Tuned by Lotus'… lol… would you buy a car, 'Tuned by Proton' or 'Engineered by Proton'???

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  • I met a bagger…… I gave his some loose change coins…. but he ask me to dig into my wallet for notes.


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  • daer edw,

    you are right, bagger are not chooser.

    take it or leave it

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  • there is 2 thing I know that the government should not do or have. (but i will only mention one of the 2).

    Business should be run by businessman, Politician should run the country.

    The problem in Malaysia is that the Politician are running the business, that is why we have all this problem in the country, the politician are more concern on the government new policy effect their personal sale, rather than the country. A new policy approve by the cabinet, it is then design to benefit the business the government is running or the politician themselves, rather then the improvement of the country.

    example, Proton. If this company is run by a businessman instead of politician, there will not need for all the “protection” and poor quality car.

    example, RICE we eat everyday, it is now being monopoly by Bernas, politically link company, they is why the price of rice is very very very very HIGH.

    example, motorcycle price is increasing, why? It is making the rich richer by robbing the poor.

    Malaysia WILL not grow when politician run the business.

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