Former premier and Proton adviser Dr Mahathir Mohamad has slammed the national carmaker's decision to sell its controlling stake in debt-ridden motorcycle maker Agusta for a token one euro (RM4.55).

"This sale must cause Proton to lose RM315 million," Mahathir said in a joint statement with his protege and former Proton chief executive Mahaleel Ariff, who was ousted last July.

"As the two people most involved in the purchase of MV Agusta, our credibility and honesty are at stake," they said.

Mahathir said there was no urgent need to sell the stake in the Italian motorcycle company as its debts had been frozen.

"Assuming that this relieves Proton from paying the loss incurred by MV Agusta over the 15 months at 26.87 million euros (RM122.3 million), it would still lose the purchase price of 70 million euros (RM318.66 million) by selling off at one euro," he said.

Proton announced last month that it had sold its 57.75 percent stake in Agusta to Italy's Gevi SPA, which will assume Agusta's restructured frozen debts of 106.9 million euros (RM486.6 million) and shoulder working capital requirements of 32.5 million euros (RM147.95 million).

Proton said the sale of the Italian motorcycle firm, which it rescued a year ago with a 70 million euro investment, was in line with its strategy of divesting non-core assets.

Failed strategy

Mahathir also accused Proton of implementing a "failed strategy" by giving Proton car buyers discounts on a total of 54,000 cars which cost the national automaker an estimated RM108 million.

Proton suffered a net loss of RM154.33 million for the second quarter to September, reversing a profit of RM198.91 million a year earlier.

It attributed the loss to provisions totalling RM160.7 million, mainly for the struggling Agusta unit.

Proton used to sell six out of every 10 new cars in Malaysia but sales have been tumbling for the past few years as the national automaker feels the bite of growing foreign competition while the government whittles away protection.

From a market share of 60 percent in 2002, Proton saw a decline to 48 percent in 2003 and then 44 percent in 2004.