Honda in tie-up with Malaysia's Proton

The parent of automaker Proton will enter a partnership with Japan's Honda, the companies have said, in the troubled Malaysian car manufacturer's latest stab at revival through a foreign tie-up. In a statement to the Malaysian stock exchange on Monday, Honda and Proton's parent DRB-Hicom said the partnership will explore collaboration in "technology enhancement, new product line up, platform and facilities sharing". "This collaboration will provide positive impact to Proton and the DRB-Hicom Group in the long run," added the statement, which gave no further specifics on the proposed cooperation. Proton was formed in 1983 as part of a plan to jump-start a national industrialisation programme. But it has suffered from weak sales, a reputation for unimaginative models and poor quality, and has struggled to stay competitive and penetrate global markets. Early this year, DRB-Hicom, a leading car distributor and importer, acquired state investment arm Khazanah Nasional's stake in Proton. Khazanah said it sold the stake as part of a bid to increase the carmaker's prospects amid growing competition from Japanese, European and Korean carmakers in the Malaysian market. Honda, Japan's third-largest auto manufacturer, has suffered troubles of its own. It recently lowered its sales target in China, the world's largest auto market, as Chinese consumers have shunned Japanese brands owing to a territorial row between the two Asian powers over a group of islands. Previous negotiations to sell stakes in Proton to Volkswagen and General Motors fell apart because of the Malaysian government's desire to keep the company domestically-owned. Proton also owns money-losing Britain-based sports car unit Group Lotus.