Apparently talks between VW and Proton concerning the German automaker acquiring a controlling stake in the Malaysian company have stopped due to opposition coming from Proton's senior management. VW's separate plans to use Proton's manufacturing facilities in Malaysia to build its own cars have also been discontinued. Though VW claims that this isn't a takeover, Proton's management doesn't consider it a fair deal. VW would gain significant control of Proton during a time in which the Malaysian government is opening up the country to imports. Proton would benefit from VW's global distribution and exchange of technical knowledge, but apparently that isn't enough to make this deal move forward.
More ponderings on Proton:
Will VW buy Lotus?
VW in talks to buy Proton
VW details plans to hit profit goals

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