KUALA LUMPUR (Oct 12): Tan Chong Motor Holdings Bhd and Chinese firm Xiamen King Long United Automotive Industry Co Ltd have mutually agreed to terminate a memorandum of understanding (MoU) signed within relation to the exclusive rights to distribute the latter's Kinggo microbus model in Vietnam in both completely built-up and completely knocked-down forms.

In a bourse filing, Tan Chong said its indirect wholly-owned subsidiary TC Motor Vietnam Co Ltd (TCMV) and King Long agreed to terminate the MoU, saying the proposed collaboration "is not economically viable for TCMV".

As such, the MoU will expire on Oct 18.

"Notwithstanding the above, TCMV remains open for future collaborations with King Long should such opportunity arise," it said.

In an email to theedgemarkets.com, Tan Chong group chief executive officer Daniel Ho clarified that the group had an ongoing partnership with King Long and remains the sole and exclusive distributor of the latter's bus coach in Vietnam.

"This is supported by the assembly plant operation and an extensive sales network backed by authorised dealers and after-sales service centres.  [Tan Chong] remains committed to the group's investments in Vietnam and will continue to explore further opportunities there."

TCMV's principal businesses involve manufacturing and assembly of buses, trucks and automobiles including the distribution and servicing of automobiles, trucks, lorries and omnibuses.

Meanwhile, King Long is a well-known company for producing buses and microbuses in China. King Long has three manufacturing bases in China with a total land area of 800,000 square metres and annually produces 25,000 buses and coaches as well as 30,000 mini vans, according to Tan Chong's filing with Bursa Malaysia dated Oct 19, 2020.

Shares of Tan Chong fell one sen or 0.85% to close at RM1.16 today, giving the group a market capitalisation of RM780 million.