Once the shining star of Malaysia's industrialisation process, Proton is today seeing its grip on the domestic automotive market weakening.

To date, Proton`s local sales has hit an all-time low market share of 44 percent, almost 36 percent lower than its about 80 percent market share in the early 1990s.

Despite repeated denials from none other than the current advisor to Proton and former prime minister of Malaysia, Dr Mahathir Mohamad that there would not be any strategic alliances or tie up with foreign car makers, a deal with Germany`s Volkswagen AG has finally been inked on Oct 27 in Hanover, Germany.

Prime Minister Datuk Seri Abdullah Ahmad Badawi has confirmed that national car maker Proton has entered into a strategic alliance with Volkswagen AG, the world's third largest car manufacturer renowned for its long-standing beetle cars.