Volkswagen has signed an agreement of intent to buy a significant stake in the manufacturing arm of Malaysia’s state-owned Proton. The information was leaked from an inside source to XFN-Asia, ahead of an official statement due on the 8th of February. VW’s expected to purchase up to 51% of Proton’s manufacturing arm, giving the German giant control over the Malaysian carmaker’s factories.

A few years back it was reported that Volkswagen was keen to join with Proton to increase its capacity in Asia to build its Passat and Fox models. Proton has been losing market share to a host of international competitors ever since, including Malaysia’s own Naza and Perodua Motors. Other bidders that were hoping to buy into Proton include General Motors and the PSA Peugeot-Citroen group. Malaysia’s government had preferred either VW or Peugeot-Citroen to win the bid, and it appears as though GM and the French duo have lost out.