Volkswagen ends partnership with Malaysia's Proton Holdings

FRANKFURT, Germany - Volkswagen AG said Thursday that it was ending its strategic partnership with Proton Holdings BHD, abandoning their plan to build cars in Malaysia.

The companies set up the strategic partnership in September 2004 with the aim of setting up an assembly line for VW cars in Malaysia.

But the arrangement ran into a roadblock last year amid Wolfsburg-based Volkswagen's efforts to obtain a majority stake and management control of the national automaker.

Proton, controlled by the government's investment arm, Khazanah Nasional Berhad, had said it was open to selling an equity stake to Volkswagen but ruled out ceding control to Europe's biggest carmaker.

VW Chief Executive Bernd Pischetsrieder told analysts at the North American International Auto Show in Detroit that the company had specific ideas about how to go forward with Proton. He did not elaborate.

"Unfortunately, the Malaysian government and Proton had other ideas," he said.

Shares of Volkswagen were up more than half a percent to 47.90 euros ($57.90) in Frankfurt trading.