Proton is openly looking for strategic partners for its manufacturing operations and Volkswagen is seen as a front runner.

A report in the Malaysian nationa news agency, Bernama, said Volkswagen was willing to commit to a $545 million (£276.4m) deal for a 51% stake in Proton’s manufacturing business.

However, VW will not control Proton's holding company, in which government investment arm Khazanah Nasional has a 43% stake in Proton.

Khazanah is expected to remain the major shareholder at Proton, Bernama said.

Such an arrangement would enable Proton to control sales and distribution while Volkswagen can access Proton's assembly lines.