PSA Peugeot Citroen also ended talks with Proton, which owns the Lotus Group, over a possible collaboration last month.
Tan Sri Nor Mohamed Yakcop, Malaysia’s second finance minister, said: "We will decide on the partner for Proton within the next three months."
Yakop declined to comment on whether talks has started with other prospective partners for Proton. The government had already missed its self-imposed March 31 deadline to name the strategic partner for Proton.
Khazanah Nasional, the Malaysian government investment arm, owns around 43% of Proton. When asked if Volkswagen's intention to have a 51% controlling stake in Proton was the reason for its pullout, he said: "It's not a major issue. Nothing has failed because of that reason."