The state-controlled company, which announced an unexpected quarterly loss, last month, signed an agreement with Nissan to undertake a three-month "feasibility study" to look into technology cooperation.

Proton said it hopes to incorporate "select technologies and manufacturing expertise" into its cars upon completion of the study.

"This study we have agreed to do will focus purely on technology sharing," Syed Zainal Abidin Syed Mohamad Tahir, Proton Holdings Berhad group managing director said in a statement to AFP.

Syed Zainal said a technical pact with Nissan, Japan's second largest carmaker, would allow Proton to reduce time and money spent developing new models that will appeal to consumers.

Proton has been searching for a collaborator in a bid to penetrate foreign markets and develop attractive models to compete with growing competition from Japanese, European and Korean carmakers in its domestic market.

The announcement comes after the Lotus group, which is owned by Proton, announced last December that it had taken a major equity stake in the Renault Formula One team, which will this year be renamed "Lotus Renault GP".

French automaker Renault has a 45 percent stake in Nissan.

Proton was formed in 1983 by then-premier Mahathir Mohamad as part of an ambitious national industrialisation plan. But it has suffered from a reputation for unimaginative models and poor quality.

The firm last month announced a net loss of 60.1 million ringgit ($19.8 million) in the third quarter to December 31 compared with a profit of 79.7 million ringgit a year earlier.

Meanwhile Proton's shares closed down 1.7 percent at 3.45 ringgit ($1.14 dollars) due to analysts concerns that its attempt to revive its sports carmaker Lotus could deplete its cash reserves.