French carmaker Renault and Japanese partner Nissan are in final talks to win a controlling stake in AvtoVaz, the top automaker in Russia, according to a newspaper report published yesterday.

Renault SA already holds an equity stake of slightly higher than 25 per cent in AvtoVaz and Nissan aims to acquire a 25 per cent stake, the Nikkei business daily said.

Nissan’s investment would reach nearly $1 billion as major automakers step up mergers and acquisitions in emerging markets, the newspaper said, without naming its sources.

The deal would make the Renault-Nissan alliance the world’s third-biggest automobile group, putting it ahead of Volkswagen but behind Toyota and General Motors, it said.

After taking control of AvtoVaz, Nissan and Renault plan to greatly expand the company’s plant in central Russia and begin manufacturing a Nissan-brand subcompact as early as 2012, it said. Nissan and Renault had earlier announced plans to invest up to $2 billion in Russia by 2015, viewing the country as an important strategic market.

Nissan could not confirm the report.

“Our alliance (with Renault) will continue to cooperate with AvtoVaz but we have no further comment at the moment,” Nissan spokesman Mitsuru Yonekawa said.

The Russian auto market is now recovering fast after enduring a slump during the global economic crisis.