VW shuts down tie-up with Proton

Volkswagen has announced that talks with the Malaysian government have ceased. The German manufacturer had been discussing cooperation with or investment in Proton Holdings, the vehicle manufacturer owned by the Malaysian government.

Volkswagen has not explained why the talks have failed, but the decision was made in conjunction with the Malays and leaves VW free to pursue the acquisition or establishment of other interests in South-East Asia.

The Malaysian government has watched even Proton's domestic sales slide in recent times and the company has not made the impact in export markets that competitors from other parts of Asia have accomplished.

So it's in the government's best interests to off-load what is increasingly perceived to be an under-performing brand, but Volkswagen's withdrawal from talks has just made that a little harder to achieve.