Volkswagen Ag May Share Technology With Proton

By: Rain Stockton

On a report that Volkswagen AG may have agreed to share technology with Proton Holdings Bhd., and to acquire a stake in its manufacturing unit, shares of the unprofitable Malaysian automaker rose.

After the Edge magazine said that Volkswagen may pay several hundred million ringgit and supply vehicle platforms as part of an agreement, the stocks of Proton jumped as high as 5.2 percent. The report also said that the biggest carmaker in Europe, Volkswagen, will own 51 percent of a new company that will own Proton's manufacturing division.

Analyst Mohd Hanafi said that the agreement seems to be just waiting for a formal decision. The analyst at Alliance Research Sdn. in Kuala Lumpur, with a ``buy'' rating on Proton stock, added that any kind of new positive development would surely have an impact on the share price.

Based on the estimates of Hwang-DBS Vickers Research Sdn., the control of Proton's car making division may cost 900 million ringgit ($263 million). The state-owned automaker needs an ally to help roll out new models and turn out increasing sales.

Khazanah Nasional Bhd. spokesman Mohd Asuki Abas refused to comment on the report. Khazanah, a Malaysian government investment unit, holds 43 percent of Proton. Proton Spokeswoman Faridah Idris said that she was not able to comment immediately.

Proton shares jumped as high as 30 sen to 6.10 ringgit. The stock has dropped 11 percent this year as compared with a 26 percent increase by the Kuala Lumpur Composite Index.

The Magazine said that according to the agreement, Proton will control domestic vehicle distribution and Volkswagen will monitor international sales.

Azman Mokhtar, the Managing Director of Khazanah, said in June 26 that he plans to look for a partner for Proton before the end of this year.

The Edge also states that collaboration between Proton and U.S. carmaker General Motors Corp. is unlikely to happen because Proton sells vehicles in Iran. According to the magazine, GM particularized that Proton must pull out of Iran, a condition that will be met.

About Volkswagen and the environment
Protecting the environment is increasingly becoming an important part of the whole process chain from product planning and product development to the recovery of end-of-life vehicles. In this connection, when a new Volkswagen is developed, several line-ups of activities guarantee the long life of the vehicle and improve subsequent recovery.

All engineers who are involved in the development process use the internal respective guidelines and broad information as the basis for creating recyclable products. Aside from avoiding the use of hazardous substances, they are also increasingly using recycled materials as well and labeling the materials of all applicable vehicle components with their material types, to succor identification and subsequent recycling.

Through a recycling analysis, the environmentally friendly properties of the new vehicle are checked.

Documentation is prepared and made available to the recycling companies to guarantee environmentally friendly recycling at the end of a vehicle's life.

The company engineers are the experts behind quality .

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