DEARBORN, Mich., Jan 16 General Motors Corp. has been in talks with Proton Holdings Bhd.,

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DEARBORN, Mich., Jan 16 (Reuters) General Motors Corp. has been in talks with Proton Holdings Bhd., a Malaysian state-controlled automaker looking to sell a stake, GM's chief executive said on Tuesday.

''There have been conversations, not extensive,'' Chief Executive Rick Wagoner told reporters on the sidelines of the Automotive News World Congress in Dearborn, Michigan.

The Malaysian government, which controls Proton through its state-investment firm Khazanah Nasional Bhd. and is trying to sell a stake in the carmaker, this week said GM was interested in Proton, but GM had declined comment until now.

GM joins a growing list of global carmakers seeking an equity stake or technical partnership in the Southeast Asian firm.

Malaysia's second finance minister, Nor Mohamed Yakcop, on Monday said France's PSA Peugeot Citroen and Germany's Volkswagen were also interested in Proton.

The Business Times, a Malaysian newspaper, said on Saturday that GM was prepared to offer as much as much as $2.85 (or 10 ringgit) for each Proton share, valuing the automaker at $1.6 billion, if the U.S. automaker is given control of Proton's finances and manages its vendor system.

But Wagoner declined to provide details. ''I cannot provide any details on that ... and I would say it is very early to try to handicap a potential outcome,'' he said.

GM's interest in Proton comes at a time when it is looking for additional capacity in emerging markets, with a focus on rapid growth in Asia.

''We have interest ... it is a growing part of the world,'' Wagoner said. ''And one where we are least well-represented.'' GM, which has seen its U.S. sales decline and market share fall steadily, is growing outside the United States. Overseas sales accounted for 55 percent of the automaker's revenue in 2006 -- a trend Wagoner said will continue in the next few years.

GM, which lost $10.6 billion in 2005 and has lost $4.8 billion in the first three quarters of 2006, will likely be challenged for the global top spot in sales by Japanese rival Toyota Motor Corp. this year.

Even as it shrinks in the U.S. market, Wagoner said the automaker was looking at partnerships in many growing markets such as China, Russia and India.

''We've got a lot of people scheming how we can grow in those growth markets,'' he said.

INDUSTRY FORECAST Wagoner said he expected the global auto industry to sell more than 69 million vehicles in 2007 as it grows at about 3 percent over the next five years, adding that he expected the growth to be ''heavily concentrated in emerging markets''.

Wagoner also said he expected the U.S. auto industry to sell about 17 million units in 2007.

''U.S. economic fundamentals are sound, and we expect growth to pick up in the second half of 2007 and continue into 2008,'' he said.

''Based on this, and the fact that retail auto sales in the U.S. have run at or below trend for the past five years ... we believe the U.S. auto industry will do reasonably well in 2007 ... and, over time, grow at a steady pace.'' REUTERS PV DS1301

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