Volkswagen Seeks Management Control Of Proton : New Volkswagen new car 2008 review

Volkswagen Seeks Management Control Of Proton : New Volkswagen new car 2008 review
by Anthony Fontanelle

Europe's largest automaker is expected to net Malaysia's national automaker Proton. The latter has seen sales reduced as competition in the Malaysian auto market heats up. With the expansion of operation of the auto industry heavyweights like Toyota in Malaysia, Malaysian car buyers have seemed to move away from Proton. The Malaysian automaker's limited lineup and poor quality of cars pushes customers further away.In an effort to save the ailing automaker, the Malaysian government has been looking for a major automaker which can help Proton back to profitability. Volkswagen and General Motors are reportedly interested in acquiring the Malaysian automaker. But the Malaysian government clearly favors Volkswagen over General Motors. Talks between the Malaysian government and the largest European automaker has been going on for three years and it is expected that the will reach an agreement before the end of the year - as early as next month.Recently, Forbes reported that the European automaker is seeking management control over Proton. This is one of the terms that Volkswagen is apparently pushing to the Malaysian government. If the Malaysian government gives consent to the European automaker, the latter will be in charge of one of the managerial functions. Volkswagen will be the one overseeing action by setting standards or goals, measuring actual performance of the company and taking corrective actions if goals are not met.Prime Minister Abdullah Ahmad Badawi who is also the financial minister according to Forbes said that the German automaker is looking for that managerial function. "They have been discussing about it but we have not yet decided on that," he said. Abdullah also said that they are looking to sign a deal with the German automaker soon but they will not be pushing Volkswagen to take immediate actions. "We want to have this decision as soon as possible but they have to take time. I cannot force them to hurry up," he added.Forbes also reported that a certain finance ministry official commented that they are expecting to have the deal closed as early as next month. "Malaysia is trying to settle it by November. This is what they intend to do," said the official. There have also been reports that Volkswagen is close to acquiring 20 percent of Proton's share.Malaysia's The Edge reported that: "Volkswagen is also seeking management control and will require the government to underwrite any losses at Proton for at least three years." This means that Volkswagen is being careful with their deal with the struggling automaker. With that cushion, they are protected if their first years with Proton prove to be unsuccessful.But with the involvement of Volkswagen with Proton affecting the Malaysian automaker positively, can be expected that Volkswagen can make money with the Malaysian automaker. When the third round of talks between the Malaysian government and the German automaker was held, the value of Proton stocks has increased.Under the agreement, it is expected that Volkswagen will be marketing Proton vehicles on the global auto market. The Malaysian automaker is now gaining popularity as it is hooked up with the German automaker. It is also expected that VW head gasket -equipped Volkswagen vehicles will be sold by Proton in Malaysia where they already have a strong dealership base.

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