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Proton, Mitsubishi in JV to build cars

Malaysian carmaker Proton and Japan's Mitsubishi Motors, will jointly build cars by early 2007 under a new deal.

india Updated: Feb 03, 2006 18:47 IST

Malaysian carmaker Proton and Japan's Mitsubishi Motors Corp, both trying to recover from losses, will jointly build cars by early 2007 under a deal signed on Friday, company officials said.

Proton may also assemble cars under the Mitsubishi marque for the Southeast Asian market.

"We are looking at some new-generation cars," Proton chief Syed Zainal Abidin Syed Tahir said at the signing.

For Mitsubishi, Japan's only loss-making carmaker, the deal is a springboard to expand its business in Malaysia, Southeast Asia's biggest passenger car market, and in the rest of the region. The firm says it has 8 per cent of the region's market.

"This alliance will help enlarge our presence in ASEAN countries," Mitsubishi President Osamu Masuko told reporters, referring to the Association of South East Asian Nations, a 10-member group that encompasses around 500 million people.

Mitsubishi was a former Proton shareholder and helped the state-controlled firm make its first cars two decades ago. It sold its stake in 2004. The new alliance does not involve equity.

Proton shares rose as much as 3 per cent before closing the day up 1 per cent at 5.40 ringgit.

The 43-year-old Proton chief took the driver's seat in December to help turn around the firm, which is struggling with old models, dwindling market share and stiffer competition.

Proton is part of ex-Prime Minister Mahathir Mohamad's effort to promote heavy industry in Malaysia. Other projects include steel mills, cement plants and motorcycle engine factories.

The company suffered a setback last month when Volkswagen AG

suddenly aborted a joint venture plan after the German carmaker failed to win control of Proton.

First Published: Feb 03, 2006 18:47 IST