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Monday, October 24, 2011

Proton eyes world market in pact with Hawtai

Sunday, October 23, 2011

Proton eyes world market in pact with Hawtai

NANNING (China): Proton is not only planning to expand its presence in China through Hawtai Motor Group Ltd but will be using the partnership as a springboard to the world market.

It's not your typical joint venture. It's a cooperation that covers many areas," said Proton chairman Datuk Seri Mohd Nadzmi Mohd Salleh.

"We are looking at the low-cost base of China. We should capitalise on that.

In Malaysia, it's difficult for us to achieve economies of scale because of our low volume."
Mohd Nadzmi (right) and Syed Zainal Abidin.

"Going to China, we can leverage on its low-cost base, especially on the component industry, which is important because 70% to 75% of the cost of a car comes from its components," he said.

Proton exchanged a memorandum of understanding (MoU) with Hawtai Motor at a roundtable dialogue between Malaysian Prime Minister Datuk Seri Najib Tun Razak and Chinese CEOs here on Friday.

Speaking to Malaysian journalists covering the 8th China-Asean Expo here, Mohd Nadzmi said the MoU would result in an agreement in about 90 days and during the period both parties would study how the cooperation would take place.

"We are talking about product collaboration. Immediately, our (Proton) Saga is ready to come to China, followed by the Exora and also our new model that we will make available for this collaboration with Hawtai," he said.

Proton managing director Datuk Seri Syed Zainal Abidin Syed Mohamed Tahir said both parties were still discussing whether to use Proton brand or Hawtai brand in selling cars in China.

"What we look forward to is one day to get our cars produced in China. From China, we can export to other left-hand-drive markets, for example, the Middle East.

"The production cost will be much more competitive. This is one of the big objectives we have.

"We can't rely on Malaysia to export left-hand-drive vehicles. We can use China as a base and because they have a big volume here and our partner will provide us with the facility, knowledge and infrastructure," he said.

Syed Zainal Abidin said Proton products in the C and B segments would complement Hawtai Motor's 4X4 vehicles and D-segment sedans.

Hawtai also has a major plant producing diesel engines for the domestic and export markets.

"So we can also use their diesel technology in our cars to exploit the diesel market, for example, in India," said Syed Zainal.

So, the discussions are not only about products but also on technology transfer."

Hawtai Motor has an annual production capacity of 200,000 vehicles, 300,000 engines and 300,000 auto transmissions.

As for the China market, Syed Zainal said Proton was targeting sales of 50,000 to 100,000 per year and for every unit, Proton would receive revenue whether in terms of components or sales or royalties for the technology transferred.

He also said Proton would not be sourcing parts from China for its Malaysian operations.

"Our priority to support our local vendors."

On Youngman Automobile Group,Syed Zainal Abidin said: "Our relationship with Hawtai is complementing our existing relationship with Youngman. We will continue to support Youngman based on our current business arrangement,"

"Youngman is a straight forward licensing agreement. Hawtai is a different arrangement altogether ... different platform, so there is no conflict of relationship with Youngman," he added.

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