Loss-making national carmaker Proton today said the first round of talks on a possible pact with France's PSA Peugeot-Citroen will begin next week but will exclude any equity sharing.

"Next week we will have the first kick-off meeting with PSA," Proton managing director, Syed Zainal Abidin, told reporters.

"We hope to find a conclusion within three months. A team has been assembled to to do this full time," he added.

Proton on Sunday said it was mulling a prospective partnership with Peugeot-Citroen which may lead to manufacturing and distribution agreements.

The two auto manufacturers signed a letter of intent to evaluate and study possible co-operation in Paris last Friday.

The evaluation, which will run to Jan 1, will focus on product development, manufacturing, distribution, contract assembly, vendor development and quality improvement, Proton said.

Sensitive issue

Syed said the sensitive issue of an equity exchange would not be discussed during the three-month period although he later told AFP that Proton was prepared to broach it in the future.

"We will talk about it when the time is right. We are prepared to talk," he said.

This is Proton's second attempt to form a strategic alliance with a European car maker since talks with Germany's Volkswagen AG failed earlier this year over the issue of overall control.

Analysts say Proton needs to find a strong foreign partner to help revive its financial state. It recently reported a RM58.6 million loss in its first quarter to June.

Proton's market share has fallen steadily in recent years.