Proton drops car project in India

Sources added that "as and when, they can offer a product in the mid-size segment specifically in the range of the Ikon, Hindustan Motors would look at it". "We have a relationship with them which will not cease with the ending of the MoU," they said.

Meanwhile, HM is in negotiations with its technological partner Mitsubishi to expand its product range. HM has excess capacity in its Chennai plant which manufactures the Lancer. Hit by a net loss of Rs 63 crore for the year 1999-2000, HM will have to look at other options in order to utilise this capacity as well as to be profitable.

The installed capacity of the plant is 12,000 units per annum. During the first half between April to December, HM has rolled out 4024 units of Lancer as against 4200-odd units in the corresponding period the previous year.

Proton is a 70:30 joint venture between the Malaysian-owned Hicom and Mitsubishi of Japan. Last year, Proton and HM had announced a joint plan to launch the Wira which was to be positioned in the lower end of the mid-size segment. As per the MoU, production was to commence in the last quarter of 2000, and to start with 3,000 units were to be manufactured.

The Wira is exported to 50 countries, including the UK and is a totally indigenous product of the Malaysian company. Earlier, Proton reportedly was not keen to invest the stipulated $50 million in its proposed subsidiary. It also wanted to wait till April 2001 when the quantitative restrictions would be lifted.

According to government’s MoU policy, this is the minimum investment which a foreign manufacturer is expected to inject in a car venture during a three-year period.