Proton ties up with Honda

DRB-HICOM, in a statement to the stock exchange after the close of trading, said that the agreement signifies the potential of a long-term strategic collaboration with Honda.

Proton Holdings Bhd, the national carmaker, has signed a collaborative agreement with Honda Motor Co Ltd, the world's seventh largest carmaker.

 The agreement will get the ball rolling for the two companies to explore partnerships in the areas of technology upgrade, new products and sharing of platforms and facilities.

Shares of DRB-HICOM Bhd, Proton's parent, was heavily traded yesterday on anticipation that a deal was imminent.

The stock rose to an intraday high of RM2.60 a share, before closing the day at RM2.53, up some six sen from last week's close.

Year to date, DRB-HICOM shares have out performed the benchmark FBM KLCI by 24.02 per cent this year, as opposed to the all blue-chip index 9.27 gain in the same period.


"Having a strong and renowned global automotive player like Honda as the foreign strategic partner to Proton will provide Proton and the DRB-HICOM Group with the opportunity to grow as an original equipment manufacturer (OEM).

"The opportunities are endless," DRB HICOM said in the statement, adding that the agreement was signed only yesterday.

Business Times reported on Monday that Proton was poised to ink a strategic partnership deal with one of the top Japanese automakers.

The report also stated that it will take about six months before things are firmed up.

Proton's tie-up with Honda will help cement the strong relationship with DRB-HICOM, which spans more than 35 years.

In 1985, DRB-HICOM and Honda had teamed up to set up Hicom-Honda Manufacturing Malaysia Sdn Bhd to help in the manufacture of Honda motorcycle engines and components for the popular cub models in Malaysia.

In 2000, DRB-HICOM and Honda set up Honda Malaysia Sdn Bhd, which eventually led to the setting up of a plant in Pegoh, Malacca.

The plant in Malacca assembles mainly three models, the Accord, Civic and City.

According to the Malaysian Automotive Association, as of November 2011, total sales of Honda Malaysia was 32,237 units.

While getting Honda will be a feather in the cap for Proton, the real winner is DRB-HICOM, as this is the second time in as many years, that the company has managed to woo a top automaker to Malaysia.

Two years ago, DRB-HICOM inked a deal with Europe's largest carmaker Volkswagen AG to assemble Passat sedans in Malaysia, at the company's manufacturing base in Pekan, Pahang.

In a December 2010 statement, Volkswagen said the Pekan facility, which will later make VW's Polo and Jetta models, will have an initial capacity of "several thousand" vehicles a year by the time it reaches full-scale production at the end of 2012.

 By Francis Fernandez, btimes.com.my