After rumours of talks between PSA Peugeot Citroen and Proton surfaced back in May 2006, we can finally see some results with Proton and Peugeot having signed a letter of intent in France to study possible co-operation between the two companies last Friday on the September 15th 2006. The evaluation is expected to reach a result on January 1 2007, which is when the pact will expire, unless extended.

Possible co-operation would focus mainly on the ASEAN region but could include other regions as well, and would involve product development, manufacturing, quality initiatives, vendor development, contract assembly and distribution. For PSA Peugeot Citroen, it could possibly result in the increase of Peugeot and Citroën vehicles sales in Malaysia, local assembly of PSA Peugeot Citroen vehicles in Proton’s assembly lines as well as make Malaysia PSA Peugeot Citroen’s hub for ASEAN operations.

PSA Peugeot Citroen is not foreign to partnerships with other companies. They currently have a joint venture with Toyota for small cars (the Peugeot 107, the Citroen C1 and the Toyota Aygo are the same car), a joint venture with Mitsubishi for SUVs (Peugeot 4007 based on Mitsubishi Outlander), engine partnerships with BMW (2nd generation new MINI’s engine is a project between BMW and PSA Peogeot Citroen), as well as other partnerships with Fiat, and Seat. All these partnerships function without cross-shareholding.

This is not the first time PSA Peugeot Citroen and Proton have dealed together. The old Proton Tiara was based on the Citroen AX. Sad to say, Proton’s first foray into the small car market was pretty much a flop.

A question that comes to mind is – what will happen to the pre-existing relationship between Naza and Peugeot? Previously, Naza Group managing director Tan Sri SM Nasimuddin SM Amin said Naza had plans to turn its new Penang plant into an exclusive production facility dedicated entirely to the Peugeot marque, and was bidding for rights to manufacture other Peugeot cars.

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