Looks like the talks between Proton and Volkswagen aren't going as well as they could... again. Both companies have said that talks are continuing, but The Edge business newspaper is reporting that no agreement appears likely in the near future. They reported that VW has been "less keen" about the deal lately. The first round of deal breaking news came in December but things appeared to be back on track since then. Seems like there have been a lot of delays in the negotiations, fueling rumors of some discord, even though VW has already signed their letter of intent to purchase 51% of the company.

The deal itself involves the manufacturing part of Proton, which is Malayasian owned. VW is looking for additional production capacity for its Passat sedan to help with Japanese exports. Malayasian built Passats would avoid the Japanese tariffs because of a free trade agreement between these two countries. And even better news for Volkswagen is the fact that Malaysia is also working on free trade deals with Australia and the U.S. So they could also increase manufacturing there in the future for export to those markets as well.

Other companies are still showing interest in Proton, including three Malaysian firms. Some industry insiders even say GM is going to throw its hat into the ring. Another automaker that had been involved in the bidding was PSA Peugeot Citroën, but it has announced that it's no longer interested.

[Source: Motor Authority]