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PSA in talks with Proton

PSA Peugeot Citroen is in talks with Proton, Malaysia's state-owned carmaker, on forming a strategic alliance in an effort to enter the south-east Asian market.

Syed Zainal Abidin Syed Mohamed Tahir, Proton's managing director, said he hoped talks would be concluded soon with Peugeot, which might include the French carmaker taking a stake in Proton.

"Proton is a logical partner as Peugeot wants to penetrate the south-east Asia market," he said.

Proton this week reported full-year net profit of Malaysian $47m (£6.9 million), its worst performance since its founding in the early 1980s.

In spite of declining sales, Proton is proving an attractive partner for foreign carmakers because its modern plants have plenty of spare capacity to produce other models.

Peugeot is among three international carmakers that lack a production presence in south-east Asia, along with Volkswagen and Hyundai Motor.

Peugeot said on Wednesday it had held talks with the Malaysian carmaker but "there is no concrete plan for co-operation with Proton", Reuters reported.

Proton has already announced it is negotiating with Mitsubishi Motors, China's Chery and Volkswagen on sharing production facilities and developing new car models.

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