Russia's GAZ Group is again in talks to buy Italian diesel engine producer VM Motori, Prime-Tass, citing Russian business daily Vedomosti, said on Friday.

The paper's sources were an official from the Nizhny Novgorod government and a representative of a company working with GAZ.

VM Motori is a joint venture between US-based companies General Motors (GM) and Penske Corporation.

GAZ owner Oleg Deripaska, reportedly bought a stake of about 5% in General Motors last year. The move may be to linked to GAZ's earlier purchase from Chrysler of the tooling for the previous-generation Dodge Sebring which GAZ will sell in Russia from 1 September.

Prime-Tass last October reported that this model (to be called the Siber in Russia; trial production has just started) would get a locally-made diesel engine option, and that GAZ plans to set up facilities to make car diesel engines.

Marc Kempe, the spokesperson for GM central and eastern Europe, confirmed to Vedomosti that GM and Penske Corporation were in talks on selling a stake in the Italian plant to GAZ Group.

GAZ Group made the offer in the beginning of March, Kempe said. Talks are at an initial stage, he said, adding that GM had not yet made a decision on the deal.

Representatives of Penske Corporation and GAZ Group declined to comment, the daily said.

Two years ago, Russian tycoon Oleg Deripaska, who controls GAZ Group, failed to reach an agreement to buy a stake in VM Motori with either Penske Corporation, which then owned a 51% stake in the Italian plant, or with DaimlerChrysler, which owned 49%, the daily said. Roger Penske, the owner of Penske Corporation, asked an excessively high price for the plant, sources close to GAZ said.

Last year, Penske Corporation bought DaimlerChrysler's stake in the Italian plant and sold a 50% stake in the plant to GM, the daily said.

VM Motori supplies engines for Chrysler sports utility vehicles and Chevrolet models.

It also supplied 2.5 and 2.8-litre I4 turbodiesels for the previous-generation Chrysler minivans assembled under contract to Chrysler by Magna Steyr in Austria - Magna is now partly owned by Russian Machines, a company that owns GAZ, and is expected to help GAZ restore its vehicle manufacturing business in Russia.

VM is continuing to supply 2.8-litre I4 turbodiesels for the new-generation Voyager launched recently here in Europe but the vehicles themselves are now built in Chrysler's Saint Louis plant in the US, a Chrysler UK spokesman confirmed.

A Magna team reportedly is helping GAZ build the Chrysler Sebring-based Siber sedan after the Russians bought a US assembly line from the North American automaker and brought it to their plant in Nizhny Novgorod.

VM's Italian plant produced about 96,000 engines in 2007.

GAZ Group needs modern diesel engines with a two to three litre capacity for GAZel light commercial vehicles and other models, Igor Korovkin, the executive director of the Russian Automakers Association, told Vedomosti.

Additional reporting: Graeme Roberts