Honda and Proton partner up

Yet another alliance between car-makers has been announced this week, with Honda and Malaysia’s Proton signing an agreement that could see them sharing platforms, production facilities and collaborating in the development of new technology.

Acquired by DRB-Hicom at the start of this year, Proton had been eyeing a partnership with bigger companies – including Volkswagen and PSA (Peugeot-Citroen) – to boost its technology base and R&D resources, but none of them panned out until this week’s announcement of the collaboration with Honda.

The advantages for Proton are obvious, but less clear is what Honda stands to gain from the alliance – apart from perhaps securing another low-cost production base. The Japanese car-maker already builds cars in Malaysia, including the CR-V, but the new deal could see it expanding its operations in that country.

Proton parent DRB-Hicom said in a statement: “Having a strong and renowned global automotive player like Honda Motor as the foreign strategic partner to Proton will provide the group with the opportunity to grow as an original equipment manufacturer. The opportunities are endless.”

DRB made clear its intentions to boost Proton’s exports and bottom line after taking over the company at the start of the year, and the Honda deal is being seen as proof of its commitment to achieving this goal.

Honda and DRB-Hicom have a relatively long history as in 1985 they formed Hicom-Honda Manufacturing Malaysia to build Honda motorcycle engines.

The two companies teamed up again in 2000 to create Honda Malaysia, and one of the fruits of this alliance is a factory in Malacca that builds CR-Vs and other Honda models.

For Proton the new deal could be a genuine lifeline as it opens up the possibility of selling badge-engineered versions of current or superseded Honda vehicles, just as it does with former stakeholder Mitsubishi.

Proton was founded in 1983 by former Malaysian Prime Minister Mahathir Mohamad with the aim of building affordable and relatively uncomplicated vehicles for the Malaysian domestic market, and it eventually grew its reach to international markets, including Australia.

The Malaysian brand hasn’t exactly been setting the sales charts alight here, with just 909 Australian sales until the end of October this year, compared with 1319 for the same period last year.

The struggling Malaysian brand used last month’s Sydney motor show to preview its next two model launches in Australia, the small Preve sedan and seven-seat Exora people-mover.

Proton isn’t solely in the business of selling bread-and-butter cars, as since 1996 it has also been the majority shareholder of British sportscar brand Lotus, which is currently in upheaval following the suspension of former boss Dany Bahar.

Honda is also struggling in Australia and globally, where last week it notched up one million hybrid vehicle sales since 1999.

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