Proton, Volkswagen fail to reach agreement

Volkswagen and Proton have officially ended talks to create a partnership, resulting in no future alliance, partnership or joint venture.

Malaysian automaker, Proton, has announced that it was unable to reach an agreement with German automaker Volkswagen.

The two automakers had been in discussions in regards to potentially exporting Proton vehicles in order to increase utilization of its factory capacity, but talks were ended when VW said it would be unable to form an agreement due to previous obligations. This is the second time the two companies have attempted to form a partnership, after the Malaysian government ended talks aimed at forming an alliance in 2007, according to AFP.

"During preliminary talks between the parties, Volkswagen confirmed that it currently has other priorities and that a potential collaboration with Proton could not be pursued," VW said in a statement.

Ahmad Maghfur Usman, an auto analyst with OSK Research that was speaking with AFP said that Proton was selling a partner in order to increase export as it currently sells 86 percent of its vehicles in its home country of Malaysia. Ahmad says that Proton's manufacturing capacity it 40-50 percent under utilized, driving the desire to produce vehicles with a partner in order to increase economies of scale.

"A strategic alliance will allow Proton to optimize its low plant utilization," said Ahmad.

1. 'Malaysia's Proton says Volkswagen...' view