Peugeot explores Malaysian partnership

Peugeot, Europe's second biggest car manufacturer,is working on a far-reaching partnership agreement with the Malaysian car maker Proton designed to increase its presence in the Far East market.

The two companies signed a letter of intent over the weekend to study collaboration across a range of areas including product development,manufacturing, contract assembly and distribution.

The co-operation agreement, signed by Peugeot's chief executive Jean-Martin Folz and the managing director of Proton Syed Zainal Abidin Bin Syed Mohamed Tahir, is the eighth to be forged by the French car maker. Peugeot now has joint ventures with Toyota, Fiat, Mitsubishi and Seat to produce cars and commercial vehicles and engine partnerships with BMW, Ford and Renault.

The study, which is expected to take several months to complete, could lead to the development of new models and production of Peugeot vehicles at Proton plants in Malaysia. A Peugeot spokesman said that further details of the scope of any co-operation would emerge at a later date.

Peugeot already has a joint manufacturing company in China which produces Peugeot and Citroen vehicles for the local market. But this is its first move into South-east Asia. Proton is Malaysia's leading car maker with 11,000 employees and a distribution network covering the UK, Middle East, Australia and South-east Asia.

Peugeot said the agreement would lead to increased sales of Peugeot and Citroen cars in Malaysia. Proton said its aim was to gain technological expertise in product development and quality while raising production at its existing plants.

The agreeement with Proton comes just three months before the departure from Peugeot of M. Folz, the architect of the group's strategy of co-operating with other major car makers.

Peugeot now produces small cars with Toyota in the Czech Republic and MPVs with Fiat in Italy and Northern France. Next year, it will begin making 4x4 vehicles with Mitsubishi in Japan, and in 2008 a new venture with Seat and Tofas of Turkey will lead to the production of small commercial vehicles in Turkey.