Malaysia's troubled national carmaker Proton is in talks with potential new partners, but still hopeful of salvaging a failed alliance with Volkswagen, a report said today.

The company's new managing director Syed Zainal Abidin Syed Mohamed Tahir told the Star that establishing a partnership was vital for the loss-making automaker, and that it was in talks with several unnamed parties.

"There are many players that have the right products that can serve Proton and its market. We have to look for parties that are willing to work with us," said Syed who took up his post on January 1.

"I am convinced there are still companies that are willing to talk to us and, when the time is right, we will make the announcement," he told the daily.

"We want to be selective in choosing the partners and it should be a win-win arrangement where we can get technology, models and expertise."

Proton was dealt a blow earlier this month when German carmaker Volkswagen said it was ditching a proposed alliance with the Malaysian company after more than a year of talks.

But Proton has said it is seeking clarification over the status of the deal, and Syed Zainal said he was optimistic that the two companies could still join forces.

"We are still interested in forging a relationship with Volkswagen. We are hoping for a positive response from them," he said.

Market shares down

Analysts say that securing a strategic alliance is crucial for Proton, whose market share is shrinking in the face of competition from foreign cars.

A key auto industry group said this week that Proton led domestic passenger car sales in 2005, but its market share continued its decline to 41 percent, from 60 percent in 2002.

Syed Zainal also said that Proton would also expand to other segments in the market, including multi-purpose vehicles.

"We prefer to go into newer markets and segments and, for the vehicles, we can forge alliances to supply the right models for the right market at the right price," he said.