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Renault SA, Nissan Motor Co.’s French partner, is in talks with Germany’s Daimler AG to form an alliance that would involve cross-shareholdings between the European automakers, sources said Wednesday.

If the tieup goes ahead, a Daimler-Renault-Nissan combination would be the world’s third-largest automotive concern, following the partnership between Germany’s Volkswagen AG and Japan’s Suzuki Motor Corp., and the Toyota Motor Corp. group.

The negotiations come at a time when competition is heating up over low-cost cars for emerging markets and environmentally friendly cars.

By forming a larger alliance, the three carmakers aim to strengthen their competitive edge through joint procurement of parts and raw materials, and to enhance cooperation in development and production, particularly of electric cars, the sources said.

If the alliance comes together, Nissan will consider supplying Daimler with a small car, the Micra, which it is currently making in Thailand, and the Leaf electric vehicle that it plans to launch later this year, the sources said.

Renault and Daimler are looking at buying less than 10 percent of each other’s stock, according to reports by the Financial Times and other European media.

The two companies are also believed to be contemplating a tieup in the truck business, according to the reports.

A Nissan official said, however, the Renault-Nissan group has been negotiating with “many potential partners,” suggesting Daimler is only one of them.

Nissan is about 44 percent owned by Renault under a capital tieup formed in 1999.

The Renault-Nissan group sold an estimated 6.09 million vehicles worldwide last year. Daimler, known for its luxury Mercedes-Benz cars, had global sales of 1.55 million vehicles, including trucks, in 2009.

The combined sales of the three firms would total about 7.64 million vehicles.

In 2009, the Volkswagen-Suzuki alliance sold 8.62 million vehicles and the Toyota group 7.81 million.

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