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General Motors targets Proton in Asian push

Jeff Green From Shanghai Daily| January 18,2007

GENERAL Motors Corp has its eye on Malaysia's unprofitable car maker, Proton Holdings Bhd.

But GM Chief Executive Officer Rick Wagoner said talks are in their early stages.

"There have been conversations, not extensive," Wagoner, head of the world's largest auto maker, told reporters in Dearborn, Michigan, late on Tuesday.

"We can't throw away money, but for sure we have a lot of people scheming how we can grow in those growth markets."

GM is targeting 11 emerging markets, including China, Malaysia, and India, as it seeks to offset falling United States sales, Bloomberg News reported.

GM's sales increases in markets such as China, where the Buick Excelle is the second-most popular car, contrasts with an 8.8 percent drop in the company's US sales last year.

A partnership with Proton, Malaysia's No. 1 car maker, would certainly help GM boost sales in Southeast Asia.

"GM brands are under-represented in Malaysia," said Clare Chin, an analyst at RHB Research Institute in Kuala Lumpur with a "trading buy" rating on Proton.

Still, ceding control of Proton to GM "might be a bit tricky from the nationalistic point of view."

State-run Proton, with sales at a seven-year low, has been seeking a partner since an alliance with Japan's Mitsubishi Motors Corp ended in March, 2004.

Volkswagen AG and PSA Peugeot Citroen are also in talks to form an alliance with Proton or to buy a stake.

Shares of Proton were unchanged at 6.75 ringgit at the 12.30pm break in Kuala Lumpur yesterday, valuing the company at 3.71 billion ringgit (US$1.01 billion).

GM, based in Detroit, may offer 10 ringgit for each Proton share, the New Straits Times newspaper said on Saturday.

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