Malaysia’s PM confirms Volkswagen conducting due diligence on Proton

KUALA LUMPUR (Thomson Financial) – German car maker Volkswagen AG is conducting due diligence on Malaysian national car maker Proton Holdings Bhd as part of negotiations for a possible strategic alliance, Prime Minister Abdullah Ahmad Badawi confirmed for the first time.

He told Agence France-Presse late Wednesday it is important for Proton to be ‘comfortable’ with its potential partner.

‘And as soon as that is confirmed, then I believe we must tie up the deal as quickly as possible,’ he said.

He gave no other details of the possible tie-up.

If the alliance is pushed through, it is expected to give Proton a boost in efforts to reclaim its top spot in the local car market.

Abdullah said Proton’s launch Wednesday of the Persona, a replacement model for the 14-year-old- Wira, had ‘nothing to do’ with the timing of Volkswagen’s ‘due diligence’ study.

‘But it does prove to everyone in the world that Proton is still capable of coming (up) with an excellent and superb product,’ he said on the sidelines of an awards ceremony.

‘We are confident that Persona is the product that will put Proton back in the map and as the leader in the Malaysian market.’

Proton recently reported bigger-than-expected net losses of 591.36 million ringgit for the year to March 2007.

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