Reuters / April 14, 2004

TOKYO -- General Motors said on Wednesday it was not in talks to buy an equity stake in Malaysia's top automaker Proton, denying a media report.

Bloomberg News reported on Wednesday that the U.S. auto giant was discussing taking an unspecified stake in Perusahaan Otomobil Nasional Bhd (Proton), quoting GM spokesman Henry Wong.

"We are not in discussions to buy an equity stake in Proton. This is totally false," Wong told Reuters.

The report had quoted him as saying the talks were ongoing and preliminary, but the Singapore-based spokesman said those talks referred to a possible engineering collaboration between GM-Daewoo and Proton for a next-generation Proton vehicle.

GM-Daewoo, South Korea's third-largest automaker, is owned by GM.

Proton was not immediately available for comment.

GM entered the Malaysian market last year, mainly selling Chevrolet cars through a distribution agreement with Hicomobil Sdn Bhd. It sold less than 1,000 units in the last quarter of 2003, and around 1,100 in the first three months of this year.

Proton is owned around 35 percent by Malaysian state investment arm Khazanah Nasional Bhd, and analysts say it is ripe for a buy-out by a global automaker looking for a ready-made foothold in the growing Southeast Asian market.

Former Malaysian Prime Minister Mahathir Mohamad told Reuters on Wednesday he had been appointed an adviser to Proton, which he launched in 1983, and added he would tell the auto maker to find a suitable foreign partner

With rivals such as Japan's Toyota Motor Corp. and Honda Motor Co. flexing their muscles, Proton has seen its market share in Malaysia, Southeast Asia's second-largest car market, drop to around half from some two-thirds previously.