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Honda May Develop Car, Share Platform With Malaysia’s Proton

Oct. 30 (Bloomberg) -- Honda Motor Co., Japan’s third-largest automaker, may share car platforms and production facilities with Malaysian national carmaker Proton Holdings Bhd.

The companies will also explore opportunities to collaborate in technology and new product line-up under an agreement signed yesterday, according to a Kuala Lumpur stock exchange filing by Proton’s parent, DRB-Hicom Bhd.

“We are surprised that Honda came into the picture as it was heavily speculated that a Volkswagen tie-up was imminent,” Nik Ikhwan Nik Mahmood, an analyst at AMMB Holdings Bhd., wrote in a report today. “The focus of this tie-up would be to develop a 2-liter car via platform-sharing. We understand that DRB targets finalization of this tie-up within six months.”

Honda already produces cars in Malaysia, including CR-V sports utility vehicles, and DRB owns a stake in the Japanese manufacturer’s local unit. For Proton, the deal provides it with access to technology that could help it boost exports, after holding earlier unsuccessful alliance talks with Volkswagen AG and Peugeot SA.

“We have received confirmation from management that the Honda agreement is non-exclusive and Proton will be free to work with any other partner in future,” Lucius Chong, an analyst at CIMB Group Holdings Bhd., said in a report today. “The main agenda is to ramp up Proton’s utilization rate which is currently at 41 percent and the fastest way to do this is to work with multiple foreign players.”

‘Strong’ Player

Honda Motor fell 0.5 percent to 2,388 yen in Tokyo trading, as of 11.10 a.m. DRB rose as much as 2.4 percent to 2.59 ringgit in Kuala Lumpur trading today, before paring gains to 2.54 ringgit.

DRB, an autos-to-property group controlled by billionaire Syed Mokhtar Al-Bukhary, wants to bolster Proton after taking over the Malaysian carmaker this year.

“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,” DRB said in the statement. “The opportunities are endless.”

Proton, set up by former Prime Minister Mahathir Mohamad in 1983 to steer the Southeast Asian nation’s industrialization plan, owns unprofitable British sports-car maker Lotus Group International Ltd. and has been struggling to compete with rivals including Toyota Motor Corp.

To contact the reporter on this story: Chong Pooi Koon in Kuala Lumpur at pchong17@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho in Tokyo at ycho2@bloomberg.net

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