Volkswagen, one of the largest car makers based in Europe, signed a collaboration and license agreement with Malaysian conglomerate DRB-Hicom on Tuesday to appoint the latter to locally assemble its vehicles in Malaysia.
The Volkswagen cars to be assembled in Pahang, the central state in Peninsula Malaysia, will be meant for the local market initially, and be exported to the ASEAN markets subsequently.
DRB-Hicom, involved in automotive and services businesses, is currently assembling vehicles for Japanese and European car makers such as Suzuki and Mercedes-Benz.
The investment, estimated at one billion ringgit (322.6 million U.S. dollars), is to be shared between Volkswagen and DRB-Hicom over a period of five to six years.
DRB-Hicom managing director Khamil Jamil told reporters after the signing ceremony here on Tuesday that both parties were working out on the investment ratio.
"What we have agreed is that DRB-Hicom will take up 60 to 70 percent," said Khamil, adding that Volkswagen's cooperation with DRB-Hicom would bring about some intangible assets that would benefit the local automotive industry.
It is learnt that DRB-Hicom would expand its existing plant to accommodate the new local assembly operation for Volkswagen.
Volkswagen's member of the board of management Christian Klingler said the company's vision was to assemble 40,000 to 50, 000 units of Volkswagen cars a year in Malaysia.
He also said that about 3,000 Volkswagen cars were estimated to be sold in Malaysia this year, and the company was looking to strengthen its footprint in ASEAN markets.
Three Volkswagen models have been earmarked to be assembled in Malaysia. The assembly of Volkswagen Passat is scheduled to begin in the fourth quarter of 2011, while the assembly of other models will only take place in 2012.
