Proton in product collaboration with Mitsubishi

Here's an interesting ARTICLES from The Star Online. Interesting READ. Something to ponder about. Proton & Mitsubishi collaboration... Will it work? Hmmm... Only time will tell...



ARTICLE 1:
Friday December 5, 2008
Proton in product collaboration with Mitsubishi
By JAGDEV SINGH SIDHU and DANNY YAP

KUALA LUMPUR: Proton Holdings Bhd and Mitsubishi Motors Corp have agreed on a product collaboration that would see Proton source a vehicle from Japan to replace the Waja and Mitsubishi take the Persona and Proton’s upcoming MPV (multi purpose vehicle) to be marketed as Mitsubishis in certain markets.

The agreement would also see Proton and Mitsubishi Motors jointly develop a small hatchback car that is slated to be introduced after 2010.
The deal with Mitsubishi, which would have met the internal wishlist of Proton, departs from the strategic partner through equity shareholding route many had expected Proton to take as it tries to find its footing in a globally more competitive business.

The methods of a product collaboration were spoken in some detail by Proton managing director Datuk Syed Zainal Abidin Syed Mohd Tahir in a recent interview with Bizweek when he said some of the world’s biggest names were knocking on its doors to form a strategic collaboration.

“Today we are sitting on an opportunity and we need to act fast. The time is right for us to look (for a strategic partner). The current global crisis gives us an opportunity and going forward, we need to have better economies of scale.”
Mitsubishi Motors president Osamu Masuko said talks were ongoing and positive.
“We have a good long and healthy business relationship with Proton over the years and welcome any ideas,” he told StarBiz in an interview yesterday.

However, Masuko said any announcement of new developments in terms of a collaboration between the two parties should come from Proton, adding that Mitsubishi did not expect an equity stake in any collaboration.

“We are already business partners of Proton as we still supply some auto parts for the company,” he said,

The agreement between Proton and Mitsubishi Motors marks a return to closer ties between both parties.

The original Proton Saga was based on a Mitisubishi Lancer and other Proton models that were based on Mitsubishi platforms included the Wira and the Perdana.
But both companies had a falling out and shareholding ties ended after the Japanese manufacturer sold its stake to Khazanah Nasional Bhd.

Apart from a rebadging exercise, both companies are also earmarked to produce a small hatchback car.
Syed Zainal said there was a strong pull among global car makers to produce a small car or an “A-class segment car.”
“By ‘small car’, I mean a small hatchback, one with space and that offers fuel economy. It’s in demand now,’’ he said, adding that it would likely be done through a joint venture.

“It must be a joint development and I can assure you there is no lack of interest,’’ he said.

Apart from having a low-cost production base for a small car, the tie-up with Mitsubishi Motors could allow Proton to get its hands on an engine from Mitsubishi Motors that would power the planned hatchback.

The joint collaboration on the hatchback would mean shared costs and a division of marketing rights on future sales of the car.

ARTICLE 2: The Star, Tuesday December 9, 2008 (1)

Win-win for Proton-Mitsubishi?

A win-win relationship is a worn out cliche but somehow it rings true in the reconciliation between Proton Holdings Bhd and Mitsubishi Motors Corp.
Announcing the product-collaboration deal last Friday, Proton said both parties had signed agreements that will lead to Proton rebadging a Mitsubishi to replace the Waja, Mitsubishi rebadging a Proton for markets Proton is not involved in and they will jointly build a new Proton car.


The deal, also, indirectly spelt out the availability of Mitsubishi technology to Proton, help from Mitsubishi to upgrade Proton’s quality and the expansion of Mitsubishi into South-East Asia using Proton as a base.

At first glance, the deal is a winner as it offers not only the tangible benefits of more models and high sales when economic conditions improve, but also addresses some of the intangibles within Proton.

It also comes at little cost to Proton as it does not have to give up equity in the company while still getting the benefits a strategic equity-based partnership would have delivered.

The deal comes at a time when sales of cars globally are slowing. The credit crunch induced global recession is seeing car companies suffer such a steep drop in sales that some of the biggest names, most notably from Detroit, are fighting for survival.
Such a backdrop might have played into Proton’s hands as the relationship with Mitsubishi, which would have been more unlikely should economic conditions had been the reverse of its terrible state now, offers it a chance to take stock of its own processes and strengths and to see how it can re-position itself once economic conditions recover.

The immediate benefit for Proton would be in sales and helping to push volumes up would be the Waja replacement model.
The now tired looking Waja has been a money maker for Proton throughout this decade and getting a new car in this C-class segment is critical for Proton, especially as it takes on the more entrenched Japanese models in the country.

Furthermore, a Waja with a Mitsubishi DNA would be a valuable commodity for Proton as it would gain additional credibility in markets in South-East Asia, and possibly in the Middle Eastern markets where Proton is trying to make a name.

Quality has been a major issue for Proton for years and although the company has made significant improvement in this aspect, such as addressing the infamous dodgy power windows, there is still room for enhancement.

Proton has hired a German with experience at BMW to spearhead the quality improvement, but having Mitsubishi in the frontline working on improving the quality of the models that the companies would be jointly involved in would be a big boost for Proton.

Another spin-off from the product collaboration might be the use of Proton’s plants as a base for Mitsubishi models into South-East Asia.

At the moment, Mitsubishi cars are mainly imported as CBU units into the Asean market and having an assembly/manufacturing operations at Proton’s Tanjung Malim plant, where there is ample capacity, would allow Mitsubishi cars to be sold at cheaper prices in this region.

The deal also has an engineering services agreement. Here, Proton, which already has Lotus for some aspects of engineering skills, would utilise and likely pay Mitsubishi for engineering services towards the development on a new Proton model.



END OF 2 Articles... Source: (1) http://biz.thestar.com.my/news/story.asp?file=/2008/12/9/business/
2752050&sec=business