Peugeot-Citroen and Proton plot partnership

Mergers between car companies seem to be the in thing at the moment.

Two months ago Ford and Renault-Nissan made noises about looking into a co-operative venture, and this week rumours have been circulating about Ford and GM hopping into the sack together.

However, whereas these 'joint ventures' are of the pie-in-the-sky variety, the potential partnership between Peugeot-Citroen and Proton does appear to have some substance.

PSA Peugeot Citroen CEO Jean-Martin Folz and Proton Managing Director Syed Zainal Abidin Bin Syed Mohamed Tahir have just formalised the plan by signing a Letter of Intent to study possible co-operation between the two car makers.

The study, which is expected to last several months, will focus on a number of diverse areas such as product development, manufacturing, quality initiatives, vendor development, contract assembly and distribution.

Peugeot-Citroen stands to gain by forging an increased presence in Malaysia and other countries in the ASEAN (Association of Southeast Asian Nations) region, while Proton has long been seeking an alliance with a foreign company to help it improve quality and add modernity to its product lineup.

Many of the Malaysian brand's offerings are essentially just rebadged old-generation Mitsubishis, and the company is struggling to compete against the established Japanese brands and flourishing Korean marques.

Joint ventures are nothing new for PSA Peugeot Citroen as the Gallic concern has long had a strategy of cooperation that has led to associations with many carmakers.

Apart from jointly conceiving the Peugeot 107 and Citroen C1 with the Toyota Aygo, PSA has co-developed a 2.7-litre turbo-diesel engine with Ford (used in everything from the Peugeot 407 to the Jaguar S-Type), and it recently developed a four-cylinder petrol engine with BMW (destined for the next-gen Mini Cooper, among other cars).

A PSA-Proton alliance would yield products that could be badged either as Proton or Peugeot/Citroen, depending on the market they're being offered in.

Proton is currently a virtual non-entity in the Australian market, with just 765 sales against its name until the end of August. By contrast, Peugeot has flogged 5491 vehicles during the same period, while Citroen has found 1951 buyers.

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