The shares of the troubled Malaysian carmaker Proton has increased slightly last Monday after reports has come out that its deal with Europe’s largest automaker and producer of top-of-the-line quality VW Beetle parts is getting closer to a deal.
Analysts said that such positive news matched with a plan of the government to remove cars that are 15 years old and older have lured investors to the company. According to the Edge business newspaper last Monday, "Malaysian representatives of Proton's stakeholders have inched closer to a final deal with Volkswagen."
Proton’s shares were up by 0.05 ringgit or 0.86 percent and close at 5.85 ringgit after reaching as high as 6.10 ringgit in late trade.
Volkswagen met with Proton for the third time in Germany recently after its earlier meetings in Thailand and the United States. The foreign tie-up with Proton is very important for the Malaysian automaker in order for it to stop the decline in its market share and to stop incurring further losses.
The Edge business newspaper has also pointed some details of talks wherein Proton will still be controlling its domestic distribution network while Volkswagen will take care of the international distribution.
The Edge has also stated that Volkswagen may be required to cash out for its 51 percent equity in Proton. Volkswagen will have to invest few hundred million ringgits to get the company started.
Proton’s state investment arm Khazanah Nasional is the controlling shareholder in proton owning 42.74 percent stake. Meanwhile the state pension fund EPF and the national oil firm Petronas have a share of 12.07 percent and 8.84 percent respectively.
Khazanah’s Managing Director Azman Mokhtar has set the end of this year as the deadline for the completion of the deal with Volkswagen.
Analysts have also attributed the increase in Proton shares to government programme which will scrap old cars giving Proton the opportunity to increase its sales. According to the Edge business magazine the said programme was aimed to boost Proton’s sales. Quoted on the magazine: "It has been decided that those who voluntarily scrap their cars will be offered a subsidy to buy a new Proton car. The subsidy will be on a scale with a maximum of 5,000 ringgit."
Last Monday Aseambankers has also expressed its plan to reinforce Proton’s share price and was quoted by the Edge saying, "although we remain cautious of Proton's ability to deliver more than marginal profitability."
It can be noted that Proton has lost its status as Malaysia’s biggest-selling automaker to its rival Perodua and just recently has reported net losses reaching as high as 591.36 million rinngit or $172.4 million through March 2007.


What's Up with Volkswagen?
Europe’s largest automaker and producer of top-of-the-line VW Golf parts, , Volkswagen has recently reported that they have obtained an increase in the second-quarter profit by 16 percent attributed to new models from brands Skoda and Audi.
Bloomberg News has conducted a survey that is participated by 11 analysts who has given their media estimate resulting to Volkswagen’s net income increased that reached 1 billion euros or $1.38 billion from the previously obtained 859 million euros net income last year.
Banks were also made to participate in the survey namely Bankhauz Metzler, M.M. Warburg, JPMorgan, Societe Generale, Morgan Stanley, UBS, UNicredit, Bankhaus Lampe, DZ Bank, ABN Amro and EXane BNP Paribas.
Volkswagen to Develop a New Car in China in a Joint Venture with Shanghai Volkswagen
In other news, Volkswagen has recently signed a contract with one of its China joint ventures, the Shanghai Volkswagen. The agreement is will create a joint venture aimed for the production of a new car that would become the replacement model for the Passat brand.
In a statement released by Volkswagen, the automaker said, "It's the first time for the venture to take a role in the development work of a car sold to the international markets."
It also added that the new car which is scheduled to be launched as early as 2009 will be produced primarily for both North America and China markets. Shanghai Volkswagen is a 50/50 joint venture between Europe’s largest automaker, Volkswagen and China’s largest automaker, the Shanghai Automotive Industry Corporation.
And earlier this week, the Japanese automaker Honda Motor Co. has also boosted its China presence. The Guangzhou Honda Automobile Co. Ltd, in which Honda has a 50/50 joint venture with Guangzhou Automobile Group has developed a wholly-owned research and development unit in China as preparation for the development of the China-specific Guangzhou Honda brand.
The total investment in Guangzhou Honda’s research and development unit is around 2 bln yuan that is according to Honda.
Volkswagen Hoping to Break-Even in 2009
Dow Jones Newswires has reported last Friday that Volkswagen AG is hoping to break-even in 2009 or earlier that is according to Volkswagen’s Chief Labor Representative Bernd Osterloh.
Mr. Osterloh said that he positive that the automaker can really achieved its target of break-even but he also said that reaching such goal may prove to be difficult unless the productivity is increase and purchasing cost is reduced. He also stressed that purchasing local auto components should be considered by the automaker since it can help in reducing production cost.
Mr. Osterloh also said that North America would become the company’s central market in the future. And as evidence of this plan, Volkswagen has already sent one of its best man for the North American market, Mr. Stefan Jacoby who would assume the position of Chief Executive of Volkswagen of America this September 1, 2007. For the US market models that are similar to the Passat or the Jetta are in line for production.


Volkswagen Obtained All-Time Record Sales for 1st Half of 2007
Europe’s largest automaker and producer of high quality VW Bug parts has been able to deliver around 1.8 million vehicles in the first half of this year to customers around the globe. It’s 7.4 percent more than the same period last year. Volkswagen’s Middle East market has experienced an increase of a staggering 32 percent as compared to last year.
The Touareg has been able to prove its position as the most popular Volkswagen vehicle in the Middle East region accounting for 33 percent of Volkswagen’s total sales for the first half of 2007. There is also a 14 percent increase in the overall sales in the first half of 2007 as compared to the same period last 2006 in the region.
According to Hans-Dieter Keller the Managing Director of Volkswagen Middle East, “We are experiencing significant growth in the region as a result of our attractive and increasingly individual model range. The Touareg is our bestseller in the region and the launch of the new generation Touareg recently has boosted our sales quite dramatically for the first half of 2007. The launch of Volkswagen’s new coupe-convertible, the Eos, and the introduction to the Jetta 2.5 litre earlier this year has also contributed to this growth. Apart from the excellent model range, professional market coverage by our partners has been crucial to our success.”
Overall, Europe’s largest automaker has been able to deliver 3.09 million vehicles to customers throughout the first six months of this year. This an all-time sale record for the company for the first half of the year which corresponding an increase of 7.8 percent over the same period last year.
Volkswagen group deliveries from January through June 2007 in Europe has also experience an increase by 3.7 percent to 1.86 million vehicles of which 1.62 million was delivered to Western Union. There was also an increase in the number of deliveries in Central and Eastern Europe reaching 238,000 vehicles marking an increase of 22.8 percent.
Europe’s largest automaker was also able to sell 502,000 vehicle sin the Asia-Pacific region representing a 20.9 percent increase as compared to the first half last year. Likewise, the deliveries in China have also increased by 24.6 percent to 431,000 vehicles.
And surprisingly, Volkswagen has obtained positive results for the first half of this year on the American continents. For South America, Volkswagen has gotten 27.7 percent increase or 339,000 cars of which 260,000 was delivered to Brazil producing a 28.6 percent growth for VW there. Meanwhile in North America, Volkswagen was able to sell 263,000 vehicles or a 3.1 percent increase thereby registering a 2.8 percent increase to 163,000 vehicles.