Between Proton and DRB

OSK: Affordable Luxury Cars If Discussions Between Proton And Volkswagen Materialises

KUALA LUMPUR, March 29 (Bernama) -- Skoda or even the luxury Audi at an affordable price range is possible, if discussions between Proton Holdings Bhd and Volkswagen to set up a completely knocked down (CKD) plant here materialises, says OSK Research.

Last week, Proton Chief Executive Officer, Datuk Syed Zainal Abidin Syed Mohamed Tahir confirmed that the company is in discussion with the German automaker.

"The feasibility of this potential tie-up is expected to be announced by the end of the first half of this year.

"If it materialises by 2011, the said plant will manufacture Volkswagen sedan vehicles catering to the domestic and export market, predominantly in the Asean region," the research house said in a statement, Monday.

It added that if Volkswagen does set up its hub here, the initial investment would be less than US$200 million.

"Last year, the company inked a partnership deal with IndoMobil to set up a CKD assembly plant in East Jakarta, Indonesia, to manufacture its MPV line-up at an initial investment of US$140 million.

"With its proposed CKD plant in Malaysia and noting the presence of an MPV manufacturing plant in Indonesia, we see the local facility catering to the production of the Sedan segment," the statement noted.

OSK also opined that Proton's Shah Alam plant is the most likely candidate for the CKD facility, as it is known for its established infrastructure.

Previously, Volkswagen had shown interest in Proton's manufacturing infrastructure, to establish a CKD hub catering for the Asian market.

In a related development, the up-trend in DRB-Hicom Bhd's share price has become more aggressive lately, on speculation of a strong possibility of the company securing a CKD deal with Volkswagen rather than Proton, says OSK Research.

"With both Proton and DRB in the picture, it remains to be seen which plant Volkswagen would eventually opt for," the statement added.

-- BERNAMA