Mitsubishi ties up with Tan Chong after Mitsubishi and Proton separate

  • Business
  • Wednesday, 14 Aug 2013

PETALING JAYA: Japan’s Mitsubishi Motors Corp has joined hands with Tan Chong Motor Holdings Bhd (TCM) in a landmark deal to assemble cars for the Japanese automotive giant, after terminating its collaborative agreement with national carmaker Proton Holdings Bhd.

The agreement inked in April via Mitsubishi’s 52% owned unit Mitsubishi Motors Malaysia Sdn Bhd (MMM) and TCM’s 70%-owned unit Tan Chong Motor Assemblies was kept under wraps until yesterday when Hong Leong Investment Bank Research analyst Daniel Wong revealed in a report.

Wong said this was the second large contract assembly awarded to TCM after Subaru CKDs (initial contract size of 7,000 units per annum).

“We believe that the contract is relatively small at the moment and may involve only passenger cars, an annual volume of 4,000 to 5,000 units (complementing Thailand’s global manufacturing hub for pick-up trucks),” said Wong.

When contacted by StarBiz, MMM vice-president Hoffen Teh confirmed the report and said both parties had more or less reached consent of the contractual agreement’s details.

“The startup in production would not be so soon, and we will announce the details in due time,” he said.

He also declined to reveal the models to be assembled, but mentioned that it would be for domestic demand only.

Meanwhile, TCM said it will not be commenting as disclosure to Bursa is required only if the transaction is material.

Currently, MMM has a range of pick-up trucks and sedans in its product lineup, including the Mitsubishi Lancer, that was rebadged as the Proton Inspira previously.

A milestone for both Mitsubishi and TCM, this would be Mitsubishi’s first collaboration after it terminated its agreement with Proton following the change of ownership to DRB-Hicom Bhd, which had subsequently chosen Japan’s Honda Motor Co as a foreign strategic partner for the national carmaker.

The agreement signed in December 2008 was to develop a new vehicle for Proton, which both parties agreed on a product collaboration that would see Proton source a vehicle from Japan to replace the Waja, and Mitsubishi take the Persona and Proton’s multi-purpose vehicle to be marketed as Mitsubishi cars in certain markets.

But all these plans are called off following the termination.

To be noted, the rest of the 48% stake in MMM is owned by EON Bhd, a unit of DRB-Hicom, which is also the biggest distributor of Proton cars, after DRB-Hicom merged the operations of EON and Proton Edar.

Industry sources believe DRB-Hicom may see some conflict of interest with its multi-layered collaboration with numerous parties, adding fuel to speculation that EON’s stake in MMM could be up for sale.

For TCM, this is also in line with its intention to increase the capacity utilisation of both its assembly plants in Segambut and Serendah, which are capable of delivering 100,000 units of cars per annum.

TCM was also recently granted the sole and exclusive rights to distribute Nissan vehicles for five years in Myanmar.

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