Volkswagen says it will take at least 7 years of working with Proton before it will consider a more permanent partnership such as taking up equity in the company.

Currently cooperation between the two companies is expected to be in the form of a joint venture company operating in two phases. The first phase will involve component sales, manufacturing and distributing and this will lead to the second phase which involves collaborative design and development.

The Volkswagen Fox

Phase one will kick off in Q1 2006 with the assembly of a localized Volkswagen Passat. Localized version of the Fox MPV is due in Q3 2006 and Fox hatchback in Q1 2007.

In the end, whether VW decides to buy an equity in Proton or not depends on the success of this joint venture partnership.

Most of Volkswagen’s objectives which are increasing presence in the region, and joint development could be achieved using the joint-venture company so there is no hurry for them to purchase equity in Proton.

The details on the arrangement is expected to be finalised by the year-end 2005.

Source: AFX News via, Dow Jones via Yahoo