KUALA LUMPUR -- Foreign auto makers may be more interested in a stake in Proton's new plant than in an equity position in the Malaysian company, analysts and fund managers said.
With the Malaysian government apparently determined to keep control of the country's top auto firm, Proton Holding Bhd, a minority share might be less attractive, the analysts said. Volkswagen AG recently said it was in talks with Proton for a partnership that could give it a foothold in Southeast Asia's fast-growing auto market. Volkswagen currently does not have a regional production base. "I suspect what they really want is the plant. I suspect their discussion is more toward that," said Hasnul Ismar, who helps manage about 214 million euros (1 billion ringgit) at TA Unit Trust Management Bhd.
A spokesman for Proton declined comment.
The 385.4 million euro (1.8-billion ringgit) plant in northern Perak state can produce 150,000 units a year but could be expanded to make 1 million cars, Proton has said.
Proton is 53-percent controlled by various state entities but is under pressure as Malaysia prepares to open its market next year in accordance with regional trade agreements.
Analysts said that timetable has given potential foreign partners an upper hand in negotiations, but Proton has restructured itself to allow partnerships in its different business divisions without affecting the state's overall control of the firm.
"The ideal position for Proton would be in contract manufacturing, to capitalize on the vast Tanjung Malim plant capacity," said GK Goh auto analyst Azrul Azwar Latif.
Proton has been protected in its key home market for nearly 20 years as duties of over 300 percent put foreign models beyond the reach of most Malaysians.
But its market share fell below 50 percent in March from around two-thirds as rivals Honda Motor Co. Ltd. and Toyota Motor Corp. launched lower-priced models.