Shares of Proton Holdings Bhd., Malaysia's biggest automaker, fell after the government said Volkswagen AG dropped plans to buy a stake and the Southeast Asian carmaker posted its first annual loss in at least 17 years.
Proton stock, down 20 percent this year, fell as much as 3.7 percent in Kuala Lumpur today after the state-run automaker yesterday reported a loss of 591.4 million ringgit ($174 million) for the 12 months ended March 31. Volkswagen, Europe's biggest automaker, no longer wants a stake in Proton, Malaysia's Second Finance Minister Nor Mohamed Yakcop told reporters today.
The national carmaker, which a decade ago sold six out of 10 cars in Malaysia, this year held alliance talks with General Motors Corp. after losing half its market share to competitors. The government, still considering a technical partnership with Volkswagen, won't bail out the company and will decide the fate of the maker of Waja cars within three months.
``The decision has to made on a business basis, on a commercial basis -- no politics,'' said Tan Teng Boo, who oversees about $177 million of assets at Capital Dynamics Asset Management in Kuala Lumpur. ``Whether it's cutting jobs, getting a partner, chopping heads, we have to do whatever it is to make it a viable business entity.''
Shares of Shah Alam, Malaysia-based Proton dropped as much as 20 sen to 5.15 ringgit and traded at 5.30 ringgit at 12:23 p.m., valuing the company at 2.91 billion ringgit.
Malaysia's government, which controls Proton through a 43 percent stake held by state investment arm Khazanah Nasional Bhd., has been searching for a partner for the carmaker since an alliance with Mitsubishi Motors Corp. ended in 2004.
The government missed a self-imposed March deadline to strike an alliance for Proton.
``It's disappointing,'' said Wan Azhar Mustapha, an analyst at OSK Research Sdn. in Kuala Lumpur, with a ``neutral'' rating on Proton stock. ``It could be another lengthy wait.''
Proton, set up in 1983 by then-Prime Minister Mahathir Mohamad to promote Malaysian manufacturing, will have to turn to other carmakers, Nor said today. The government hasn't explained why it missed the deadline to find a partner for Proton, the maker of Waja sedans.
``Volkswagen is no longer interested from the equity point of view,'' he said. ``We will have to look for others to see who are interested and how we do the planning. The government will consider anything.''
Proton's loss last year compares with a 46.4 million- ringgit profit a year earlier. It also had a fourth-quarter loss of 913,000 ringgit.
This year will be ``challenging,'' the state-owned automaker said after posting a 40 percent decline in annual car sales.
Rob Leggat, the Asia Pacific spokesman for Detroit-based General Motors, the world's largest carmaker, didn't answer phone calls made to his cell phone today. The world's biggest automaker is ``still interested'' in an alliance, he said May 18.
Leggat called the discussions with Proton ``preliminary,'' more than four months after Chief Executive Officer Rick Wagoner said talks were at an ``early'' stage.
Proton's market share in Malaysia fell to 32 percent in 2006 from 40 percent a year earlier, as it lost market share to Toyota Motor Corp. Its cash on hand fell 34 percent in the 12 months to March 31 to 461 million ringgit.
All Rights Reserved. Do not reproduce, copy and use the editorial content without permission. Contact us: email@example.com.
Anytime and anywhere to know the dynamics of China's auto industry