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NEWS UPDATES 16 August 2010

VW to assemble autos in Malaysia

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Observers say it wasn’t surprising that between Volkswagen AG signed a deal to assemble Volkswagen cars in Pekan.

Both parties, Volkswagen and DRB-Hicom had been in talks over the past two years but the German automaker had given priority to Proton on whether the national carmaker would be interested in a collaboration given its underutilized plant, it said.

The research house said the talks between Volkswagen and Proton were terminated two months ago as according to Proton, it feared that localising the Volkswagen marque (or rebadging it) may cannibalise its own vehicle sales.

DRB-Hicom's Pekan plant has an estimated production capacity of up to 60,000 units per annum, and it currently assembles Suzuki and Mercedes vehicles.

Following the memorandum of understanding announced Friday, Volkswagen is expected to roll out three completely knocked down (CKD) models from the Pekan plant by the end of the first quarter 2011.

OSK Research said the three possible models could be the Golf, Beetle and Passat as they were Volkswagen's top three selling models in Malaysia currently.

As of June, Volkswagen had sold 273 Golf GTis, 96 Beetles and 90 Passats, with all three models combined representing as much as 68 per cent of the total volume sold.

"DRB-Hicom will also likely start the CKD assembly of the Audi (also part of the Volkswagen group) by 2012, for which it intends to increase yearly sales from 700 to 1,000 units," it said.

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