GM contacted Isuzu by mid-September to sound out the Japanese firm’s interest in buying its mid-size truck business, sources close to the matter told The Nikkei. Isuzu is understood to have replied that it would examine the proposal positively. The two companies are expected to soon start formal negotiations, and a basic agreement could come as early as the end of the year.

GM does not hold a commanding global market share in mid- and heavy-duty trucks— it tied with India’s Ashok Leyland in 13^th place, according to figures from Daimler (the leader), and behind Isuzu at 11^th in 2006.

Isuzu is the second-largest player in the Japanese truck industry, manufacturing 270,000 units annually. Its core business is small trucks—only 20% are midsize. Isuzu’s overseas business is concentrated in Southeast Asia. Acquiring part of GM would enable Isuzu to sharply expand midsize-truck business and enlarge its reach in North America.

With a GM deal, Isuzu midsize and large production would increase by 60% to 110,000 units annually and the firm would overtake Hino Motors Ltd. as Japan’s leading truck manufacturer, climbing from 12_th to 8_th in the worldwide ranking.

The Nikkei report also says that GM is considering selling part of its 60% stake in its diesel engine JV with Isuzu, DMAX Ltd., to Isuzu. GM formerly had a 49% stake in Isuzu, but has none now.