BY CHRISTOPH RAUWALD

FRANKFURT—Volkswagen AG has jumped on an opportunity to beef up its presence in Southeast Asia after local manufacturing partner DRB-Hicom Bhd. took a controlling stake in Malaysia's national car maker Proton Holdings Bhd., people familiar with the situation said.

Several top-level VW executives recently traveled to Malaysia to enter direct talks about expanding its existing relationship with DRB-Hicom, one of those people said.

The German car maker could take over some production capacity at Proton's modern, but heavily underutilized, plant in Tanjung Malim and make Malaysia a production hub for the entire region if talks with DRB-Hicom are successful, this ...