General Motors Turns To Malaysian Auto Distributor

Anthony Fontanelle
September 5, 2007

Earlier this year, when the Malaysian government expressed its interest in selling the majority of shares for the Asian country's national carmaker Proton, General Motors was one of the first companies to show its interest in the struggling Malaysian automaker. But the Malaysian government clearly favors the other bidder for Proton. Europe's largest automaker, Volkswagen is now being considered as the future owner of Proton.

But General Motors' aim of expanding their operations in Malaysia has not been dashed at all. Automakers like General Motors are looking to take advantage of low-cost workforce in the said Asian country. Although Proton is struggling in putting up high number of sales in recent months, General Motors was interested in the automaker because it has the backing of the Malaysian government. But when it was clear that General Motors will not have a shot at acquiring Proton, it turned its attention to an auto distributor in the country.

The Detroit automaker recently closed a deal with Malaysia's DRB-HICOM. The deal will see more General Motors cars making their appearance in showrooms across Malaysia. Aside from marketing Chevy vehicles in the country, the partnership will also be geared towards exploring the possibility of manufacturing General Motors vehicles in the said Asian country. The weak monetary value in the said country will allow General Motors to take advantage of cheap labor and materials.

In the past, DRB-HICOM has already been selling Chevrolet vehicles in the said country. The two companies though did not announce if DRB-HICOM will still be selling Chevrolet vehicles through a wholly-owned unit. The partnership will strengthen the relationship between the companies which General Motors will need as it seeks to make Malaysia a production hub.

The move of turning to the Asian region for the production of vehicles has been taken by a lot of automakers. Nissan announced earlier this year that it will make India into a major auto production hub. Volkswagen is also expected to take advantage of the cheap labor in Malaysia and it might produce auto parts such as the VW strut bar and other components as well as completed vehicles.

With the recent report that the Asian Pacific region is on track to become the largest auto market in the world, it is understandable why major automakers like General Motors and Volkswagen are already expanding their presence in Asian countries. China is expected to post increased auto sales as the economy of the Asian country picks up. India is also on its way to becoming a major auto market. In Malaysia, even with sales slowing down, it has been predicted that it will pick up as soon as Proton partners with a foreign automaker.

In addition to the aim of the partnership to make Malaysia into a production hub, both General Motors and DRB-HICOM are still interested in working with Proton. With the Malaysian government and Volkswagen ironing out sensitive issues, General Motors' involvement with Proton in the future is still not a closed book. The deadline for the Proton sale according to the Malaysian government is December this year.

Source:  Amazines.com