Volvo, the Swedish commercial vehicle and industrial group, is close to agreeing a far-reaching strategic alliance with Renault of France to create one of the world’s largest truck manufacturers.

A cross-shareholding deal could be announced before Volvo’s annual general meeting in Gothenburg on April 26, according to officials close to the negotiations.

A transaction has yet to be formally signed, but the talks were said to be advanced.

It follows an initial approach from Volvo to acquire RVI and Mack, Renault’s respective European and North American truck operations. That overture – prompted by the collapse of Volvo’s SKr60bn takeover of Swedish rival Scania -has been rejected by Renault in favour of a broad-based alliance.

Financial terms of the deal are still being hammered out. But officials indicated that it was likely to involve sizeable cross-shareholdings, possibly both in the parent companies and their truck divisions.

Together Renault and Volvo would control more than 20 per cent of the US heavy truck market and about 30 per cent of the western European market.

“The logic of the deal is to pool purchasing and product-sharing across the two brands,” said one executive briefed about the talks.

If a deal is agreed, it would create arguably the world’s first truly global truck group. Renault and Volvo are already strong in Europe and North America. Both could also contribute a share of the Asia-pacific market – Volvo through its new truck and bus joint venture with Mitsubishi Motors of Japan and Renault with its stake in Nissan Diesel, the Japanese truckmaker.

Senior Volvo managers last week agreed to explore closer ties with Mitsubishi in North America following the formal launch of their joint venture.

Both Volvo and Renault declined to comment.

Officials cautioned, however, that several sticking points could prevent an agreement. The two companies are trying to resolve how to handle Renault’s European van interests, which are tied into a joint venture with General Motors.

Renault was also said to be concerned at the likely reaction of Volvo’s Swedish shareholders, who blocked a full-scale merger of the two companies in 1994.

Industry experts, nevertheless, predicted that an alliance could ease mounting pressure on both companies. A sizeable Renault stake in Volvo would protect the Swedish group from takeover, while offering its management relative independence.

Analysts believe Volvo regards a Renault alliance as preferable to an outright bid from Fiat of Italy and DaimlerChrysler, the German-US group.

For Renault, such a transaction would greatly strengthen its US presence and expose its RVI brand to Volvo’s advanced engineering expertise and market strength in northern Europe.

Volvo has become increasingly vulnerable following the European Commission’s decision to block its bid for Scania. Its future was put in further doubt last month when Volkswagen of Germany acquired 34 per cent of Scania’s voting shares.