After dissolving a 35-year capital alliance in 2006, Isuzu Motors and General Motors are close to a new tie-up for compact commercial vehicles.

The Nikkei said the main focus of their cooperation was to be joint development of pickup trucks, which are in increasingly high demand in the US as well as Southeast Asia and other emerging markets.

The Japanese business daily noted GM had been seeking to re-establish ties with Isuzu since it abandoned engine development during its business rehabilitation. Isuzu president Susumu Hosoi and GM chairman and CEO Daniel Akerson are to formalise the new arrangement at a meeting in the US later this month, the report said, without citing sources.

In addition to the cooperation on pickups, the duo will continue discussions on the possibility of the carmaker taking a stake in Isuzu again.

According to the Nikkei, the deal would create an alliance that controls 25% of the worldwide pickup truck market.

The worldwide pickup truck market will expand by nearly 20% from 2011 to reach 5.4m units in 2015, according to IHS Automotive.

Isuzu and GM would jointly develop next-generation models and use common diesel engines. The American auto giant has been procuring roughly 100,000 diesel engines a year from European manufacturers; starting with next-generation pickups, it would install Isuzu's engines, the Nikkei said.

The two would also work together to expand sales channels in Africa and the Middle East. The alliance could open the door to use of each other's production bases as well.

GM is already the world's top pickup truck maker with a 19% market share. It is a top player in North America and China but less successful in emerging countries. Isuzu is strong in southeast Asian nations.

Akerson told The Nikkei on 13 January he had high hopes for tapping Isuzu's technologies for low-cost pickups which have led to solid sales in markets like Thailand.

GM's North American models have engines of four-five litres - too big for Southeast Asia. Isuzu, on the other hand, has a strong lineup of 2.5- to three-litre pickup trucks and expertise in developing this class of vehicle.

By working with Isuzu on models more suitable for southeast Asia, GM should be able to take on Toyota and others more effectively, the Nikkei said.

Akerson said GM aims to use the tie-up to eliminate development and production constraints in the region.

For Isuzu, which ranks sixth in the global pickup truck market, collaborating with GM would help to cut costs through parts sharing and other means. The cooperation could later extend to joint development of diesel engines.

Since ending the capital tie-up with GM, Isuzu has explored other options for cooperation. These include Toyota, which owns a 5.9% stake in Isuzu, as well as Hino Motors, a Toyota group medium and heavy truck specialist.

Isuzu has also considered a capital tie-up with Volkswagen  but it did not work out.

Isuzu also made cars up until the 1990s. It then sold some re-badged Honda models only in Japan. There was also a model-sharing deal with Honda in the US for some years.