(AFP) Malaysia's second national carmaker Perodua will become a "distant cousin" of Toyota after a bid by its Japanese partner Daihatsu Co Ltd to buy a majority stake is completed, a report said today.

Perusahaan Otomobil Kedua Sdn Bhd (Perodua) and Daihatsu are expected to complete negotiations in January over the Japanese firm's bid to raise its 25 percent stake before the start of the ASEAN Free Trade Area (AFTA), the New Straits Times said.

"Everything will change after that. The future planning structure will be different and potential too will be different," Perodua's managing director Abdul Rahman Omar was quoted as saying.

"Daihatsu sees the potential in Perodua as it is the second biggest car manufacturer in Malaysia while Perodua sees it as a good combination in preparation for AFTA 2005... Perodua cars would be like distant counsins of Toyota."

Tariffs on auto products in Asean will fall to between zero and five percent by 2003 but Malaysia has delayed cutting tariffs until 2005.

Majotity stake

Reports earlier said Daihatsu, a subsidiary of Toyota Motor Corp, planned to take up a majority stake in Perodua to increase the firm's annual output by a quarter to 150,000 vehicles ahead of AFTA.

An end to Malaysia's high import tariffs on cars, which had benefited the partners, will force them to boost competitiveness.

Daihatsu Motor now holds a 20 percent stake in Perodua and a further five percent through its local unit Daihatsu (M) Sdn Bhd Japan's Mitsui Co Ltd also has seven percent equity.

The local shareholders are UMW Corp with a 38 percent stake, MBM Resources Bhd 20 percent and PNB Equity Resource Corp 10 percent.