Volkswagen Signs Deal To Build Cars In Malaysia

Volkswagen’s attempts to crack into the Malaysian market date back all the way to 2006, with the automaker on several occasions trying to ink a deal with state-owned Proton. Now, finally, Volkswagen has signed an agreement to produce its vehicles in Malaysia, starting with the new Passat at the end of 2011.

Volkswagen will be working closely with Malaysia’s DRB Hicom, using its existing structures and capacities including a plant in Pekan. DRB Hicom currently owns the largest automotive production network in Malaysia and builds passenger cars and commercial vehicles at its plants in Pekan and Melaka.

Note that the cars built by Volkswagen in Malaysia will rely on Completely-Knocked-Down kits; essentially completed modules shipped from Germany and then pieced together to gain local production status. It’s a strategy that several other foreign automakers, including BMW and Mercedes-Benz, utilize to partially circumvent Malaysia’s ridiculously high tarrifs.  

Annual production will range around several thousand vehicles, with this figure scheduled to increase each year.

Today’s announcement is a crucial step in Volkswagen’s plan to become the world’s biggest automaker by 2018. To achieve such a feat the automaker will need to gain a foothold in the expanding Southeast Asian market, and now it appears that it has done just that. What it doesn’t mean, unfortunately, is that we’re not any closer to seeing the new Passat in local showrooms.


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