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]