National carmaker Proton has dropped plans to buy into ailing Italian motorcycle manufacturer Ducati Motor Holdings SpA, a report said today.

Instead, it will concentrate on developing another Italian motocycle company which it already owns, MV Augusta SpA, the New Straits Times said.

Proton had been considering turning the Ducati rival into an automotive company, the report said, quoting unnamed sources.

It acquired a 57.75 percent stake in MV Augusta last year by pumping in 70 million euros and is reportedly looking into using the name for high-end luxury performance cars.

MV Augusta also makes Cagiva and Husqvarna motorcycles, and their names would possibly be used for sports models and off-roaders respectively, the New Straits Times said.

Proton, which also controls British sports car manufacturer Lotus Group, is moving aggressively to expand assembly overseas including China, India and Indonesia, and has plans to put up to 20 new models on the road in the next decade.

It was set up in 1983 as part of Malaysia's drive into heavy industry and used to sell six out of every 10 new cars in the country.

Market share falls

Its market share fell to 49 percent in 2003 and dipped further to 44.5 percent in the first eight months of 2004 as consumers hoped that tax changes would make foreign cars more affordable.

In October, Proton announced a tie-up with Germany's Volkswagen AG to assemble and sell VW cars as part of a "long-term strategic partnership" that could lead to technology sharing and joint development of cars.

However, there were no plans for VW to take a shareholding in the 38 percent state-owned Proton.

As part of the deal, Proton gets access to VW engines and other components. VW will develop a program to boost production standards at Proton plants and study opportunities to utilise Proton's technical expertise and facilities for the joint design and development of cars.