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French take a close look at Proton possibilities

Small car options: The Savvy could benefit from a Peugeot alliance.

Peugeot and Proton take the first step towards a massive co-operation deal

20 Sep 2006

PROTON Holdings Bhd has confirmed it is studying the possibility of forming a partnership with PSA Peugeot-Citroen.

As reported by GoAutoNews several weeks ago, the partnership could lead to manufacturing and distribution agreements. This could mean the manufacture of Peugeot cars for the South-East Asian market, including Australia, by the Malaysian car-maker.

The two car-makers signed a letter of intent to evaluate and study a possible co-operation in Paris last week.

The evaluation, which will end on January 1, will focus on product development, manufacturing, distribution, contract assembly, vendor development and quality improvement, Proton said.

Although Proton aims to "leverage the technological expertise of a major global automobile manufacturer", it said the French company expects to increase sales of its Peugeot and Citroen vehicles in Malaysia.

Such a partnership could also serve as a foundation for developing Peugeot-Citroen’s business in the ASEAN (Association of Southeast Asian Nations) region, it said in a statement.

The Malaysian government holds a 42 per cent share in Proton. Proton is keen to hook up with a foreign car-maker to help improve quality and modernise its product line-up.

Previous agreements were flagged with Volkswagen, but fell through. Fiat was also believed to be interested in a joint-venture deal with the Malaysian car-maker.

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