The Malaysian Automotive Institute (MAI) is understood to have submitted its proposals and recommendations pertaining to the consolidation of the automotive
sector to the government for a final decision on the merger between the players.

Industry sources said MAI had interviewed several of them and submitted the proposal to the government, with a decision likely to be made soon.

"From what we know, the study has been submitted to the authorities? it should be announced soon. The two by-elections in Galas and Bukit Sapi, and the prime minister being under the weather possibly delayed it," said an industry source.

MAI was incorporated on April 16th to function as an independent non-profit organisation under the auspices of the Ministry of International Trade and Industry (MITI).

According to its website, MAI serves as a focal point and coordination centre for the development of the local automotive industry in all related matters, including formulating the national automotive policy and coordinating automotive-related research and development, among others.

The consolidation of the auto sector, if it happens, is widely expected to entail a merger between two national automakers, Proton Holdings and Perusahaan Otomobil
Kedua (Perodua), and could possibly include some other players as well.

Officials from MAI were not available for comment, but some of the players confirmed that they had meetings with MAI and their views were taken into account in the report to the government.

Proton, Perodua, UMW

Proton is 42.74% owned by state-controlled investment arm Khazanah Nasional. Other government-linked shareholders include the Employees Provident Fund (EPF) which controls 12.43%, Petroliam Nasional (Petronas) with 7.85%, pilgrim fund Lembaga Tabung Haji with 3.06%, Kumpulan Wang Persaraan (Diperbadankan) holding 2.76% while other government-linked funds, such as Valuecap and Permodalan Nasional (PNB) among others, control an additional 4.5%. This means that the government and its entities control about 68.84% of Proton.

Perodua's shareholders are UMW with 38%, MBM Resources holding 20%, Daihatsu Motor Co. with 20%, PNB Equity Resource Corp controlling 10%, Daihatsu (Malaysia) with 5%, while Mitsui & Co. has 4.2% and Mitsui & Co. (Asia Pacific) has another 2.8%.

UMW Corp is a wholly owned unit of UMW Holdings. UMW Holdings is about 60% controlled by PNB and its various funds. Other major shareholders include the EPF with 14.96% of UMW Holdings and Lembaga Tabung Haji with 1.42%.

Thus, it appears that PNB and other government-linked funds have a combined stake of 76.8% in UMW Holdings. There are also other companies such as Sime Darby, which is 54.4% controlled by PNB, with a relatively large motor business.

Details of the proposed merger, however, are still sketchy.

Media reports have revealed that, while the top brass at Proton have been quite warm to a merger proposal, their counterparts at Perodua are not too keen. Perodua has been the largest selling local car company, with over 30% market share since 2006. In 2005, Proton had a market share of about 40%, but this has since slipped to below 30%.