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By Gleb Stolyarov and Tatiana Voronova
It was not immediately clear how big a stake is being discussed or the value of the deal.
GAZ is a part of the Basic Element group that holds the assets of Russian businessman Oleg Deripaska. Both GAZ and Basic Element declined to comment, while a spokesman at VW headquarters said he does not comment on market speculation.
"There are talks, they are trying to reach an agreement. Deripaska has long been looking for a partner and VW does not have a Russian partner," one well-placed industry source said.
Another well-connected car industry source, two financial market sources and another person familiar with the matter also said talks were under way.
One of the sources said that a decision on the size of the proposed stake sale has yet to be made.
A source close to VW also confirmed that talks were in progress but said the possibility of the German group taking a stake in GAZ is not the only mater under consideration.
(Addional reporting by Katya Golubkova, Polina Devitt and Jack Stubbs in Moscow and Andreas Cremer in Berlin; Editing by David Goodman)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)