The announcement made earlier today by Proton and Mitsubishi Motors Corporation (MMC) that both automakers were in a detailed discussion to enter a broad ranging collaboration, with a firm focus on developing a powertrain joint venture, is a positive move for the national carmaker.

Proton chairman Datuk Seri Mohd Nadzmi Mohd Salleh said that in collaborating with MMC, there would be no need for either company to swap equities or exchange shares. “Both companies stand to gain with the economies of scale, which will lower the cost of development,” he said.

Entering the final phases of discussion, details about the collaboration as well as the investment in the JV should be finalised in the next two months. At the press briefing announcing this, six strategic areas of the colloboration were delved on briefly.

On the powertrain front, Proton is set to build engines for MMC, which the national carmaker is also set to utilise in its future model lineup. The benefit to Proton is that it reduces development cost and time and provides economies of scale with the joint volumes, said Proton managing director Datuk Seri Syed Zainal Abidin.

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“We have to make a decision on whether to invest in a new engine, or collaborate. The duration if we were to invest in our own engine would be 18-24 months, and we’d have to invest a lot of money. In working together, we’ll have greater economies of scale,” Syed Zainal said.

The MMC powertrain production is set to take place in Tanjung Malim, and the work will not just be for assembly but involve casting and machining processes as well.

“Besides the powertrain JV, the other step of the collaboration we are finalising is the opportunity to also do OEM assembly for MMC for its products. We’re talking about two products, and one of these could obviously bring down the cost structure for MMC, and we’d offer them a quick market for it,” Syed Zainal added. No mention was made as to which these models are, though it has been bandied about that the Mitsubishi ASX is one of them.

While increasing capacity utilisation in its plants would bring about additional revenue, it is yet to be decided whether Tanjung Malim or Shah Alam will handle the consignment production of these MMC-brand models.

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Elsewhere, following on the broader strategic front scope, there was also mention of product and platform collaboration, with the co-utilisation of these aimed at further improving scale with joint values and stretching the commercial value of Proton’s products. This will also minimise the investment needed and also bring about the ability to tap into existing MMC JV partners to reduce the complexity of the collaboration.

Component sourcing is also to be improved, with joint sourcing and a commonisation of components tapping on existing component bins helping to reduce cost as well as improve purchasing power.

Meanwhile, in other news today, the company made the announcement that the facelifted Exora MPV was due to make its market debut in two months time. The long-awaited turbocharged 1.6 litre Campro mill is also set to finally make its way into the market, and also set to be introduced is a six-seater premium variant of the MPV called the Exora Prime.