September 6, 2007 / 8:38 AM / 12 years ago

Proton pins hopes on new model

SHAH ALAM, Malaysia (Reuters) - Malaysian loss-making car-maker Proton expects to reverse a long and painful slide in its domestic market share with the launch of a new model from January.

A worker cleans the Proton Savvy, manufactured by Malaysia's Perusahaan Otomobil National Sdn Bhd, during the opening ceremony for Proton's first showroom in Jakarta March 17, 2007. REUTERS/Dadang Tri (INDONESIA)

But the state-controlled company, whose market share has halved from about 60 percent in 2002, declined on Thursday to comment on its search for a global strategic partner, which industry experts regard as the key to its longer-term survival.

Proton’s major shareholder, state investment arm Khazanah, has been in talks with Germany’s Volkswagen and U.S. auto giant General Motors about selling a stake in Proton, but negotiations have been protracted and, so far, fruitless.

Proton Managing Director Syed Zainal Abidin Syed Mohamed Tahir said after Proton’s annual shareholders’ meeting that the company could recapture some market share on its own through the launch of a new sedan to replace its ageing Iswara model.

“We expect to launch another car in January. With this, we believe our market share will improve,” he said, without giving details.

Proton last month launched another new small car, the Persona, and Syed Zainal said buyers had so far ordered more than 13,500 of them.

“We are very hopeful that Persona will be a turning point for us,” he added.

Investors very much hope so. The share price was up almost 2 percent at 5.45 ringgit by the midday break on Thursday, but the stock has lost 17 percent of its value so far this year.

In July 2005, the stock touched 10 ringgit on expectations that it would forge a strategic alliance with Volkswagen but fetched about half that price by January 2006 after the German firm scrapped their plan to look at forming a joint venture.

Volkswagen is again looking at Proton amid signs that the government is more willing to sell an equity stake, but General Motors, the other potential partner, has already spoken of “unclear signals” about where the talks were headed.

“It has dragged on a bit,” GM Asia Pacific vice president Nick Reilly told Reuters in Sydney on Wednesday.

“We know there are other people interested. We are not getting terribly clear signals as to where it is going... That (a Proton deal) is a possibility but frankly if that doesn’t happen, and we should know relatively soon, we have other plans.”

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