GM Says GAZ Interested in Stake in Italian Engine Firm

General Motors on Friday said GAZ, the auto company owned by billionaire Oleg Deripaska, could become its partner in an Italian diesel engine manufacturer.

GAZ, the country's second-largest automaker, is in talks to buy 50 percent of VM Motori, GM spokesman Marc Kempe said in an interview. The stake is currently held by U.S.-based Penske Corp., headed by racecar team owner Roger Penske.

"These are exploratory talks at this point," Kempe said.

A joint venture GAZ, a unit of Russian Machines, would expand GM's ties with Russia, where it is trying to boost sales. It would also give Nizhny Novgorod-based GAZ and Deripaska more access to Western technology.

Igor Vagan, a spokesman for Russian Machines, and Ludvik Kosi, a spokesman for Penske, had no comment. Vedomosti on Friday reported the discussions, citing unidentified people familiar with the situation.

VM Motori makes diesel engines for commercial vehicles as well as for Chrysler and Hyundai light trucks.

Russians spent a record $53.4 billion on cars last year, an increase of 67 percent, according to a Jan. 22 report by PricewaterhouseCoopers.

GM is spending $300 million to build a factory near St. Petersburg to assemble Chevrolet-brand Captiva sport-utility vehicles. The plant will be able to produce 75,000 per year.

The company wants to boost its share of the Russian market to 15 percent within five years from about 10 percent now, Jacek Gorsky, general director of GM's CIS division, said in January.

Russian sales may rise 16 percent this year to more than 300,000, including 130,000 Chevrolet Niva SUVs and Viva sedans from its venture with AvtoVAZ, Gorsky said.

Basic Element, Deripaska's holding company, spans a business empire that includes aluminum, mining, construction, aviation, insurance and media.

Deripaska bought GAZ in 2000. In May 2007 he paid $1.54 billion for 20 million Class A shares in Magna International, North America's largest auto-parts supplier. The deal also gave him the right to name six of 14 seats on Magna's new board.