Honda in tie-up with Malaysias Proton

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Honda in tie-up with Malaysias Proton

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Proton was formed in 1983 as part of a plan to jump-start a national industrialisation programme.

30 October,2012 10:57 am

The parent of automaker Proton will enter a partnership with Japans Honda, the companies have said, in the troubled Malaysian car manufacturers latest stab at revival through a foreign tie-up.In a statement to the Malaysian stock exchange on Monday, Honda and Protons parent DRB-Hicom said the partnership will explore collaboration in technology enhancement, new product line up, platform and facilities sharing.This collaboration will provide positive impact to Proton and the DRB-Hicom Group in the long run, added the statement, which gave no further specifics on the proposed cooperation.Proton was formed in 1983 as part of a plan to jump-start a national industrialisation programme. But it has suffered from weak sales, a reputation for unimaginative models and poor quality, and has struggled to stay competitive and penetrate global markets.Early this year, DRB-Hicom, a leading car distributor and importer, bought state investment arm Khazanah Nasionals stake in Proton.Khazanah said it sold up as part of a bid to increase the carmakers prospects amid growing competition from Japanese, European and Korean carmakers in the Malaysian market.Honda, Japans third-largest auto manufacturer, has suffered troubles of its own. It recently lowered its sales target in China, the worlds largest auto market, as Chinese consumers have shunned Japanese brands owing to a territorial row between the two Asian powers over a group of islands.DRB-Hicom said the agreement with a strong and renowned global automotive player like Honda Motor will provide growth opportunities for Proton. The partnership will not involve an equity stake.However, Malaysian Brokerage firm TA securities said the collaboration could benefit Proton but the gains would likely be limited. At this juncture, without Honda taking equity in Proton, we see little value added to Proton in terms of technology transfer and development of new products via this collaboration arrangement, it said in an analyst note.DRB-Hicom assembles Honda models at its plant in Malaysia. Previous negotiations to sell stakes in Proton to Volkswagen and General Motors fell apart because of the Malaysian governments desire to keep the company domestically-owned.Proton also owns money-losing Britain-based sports car unit Group Lotus.