GM is seen as eager to tap Isuzu's strength in Southeast Asian markets and its diesel technology, and a deal would in many ways be a foray back to well travelled ground as the two companies were once equity partners for 35 years.

The U.S. automaker at one point owned as much as 49 percent in Isuzu before selling the holding down, disappointed with red ink spilled by Isuzu at the time and later strapped for cash of its own. Its last remaining 7.9 percent stake was sold in 2006 for $300 million.

Since emerging from its government-funded bankruptcy restructuring in 2009, GM has begun to forge some new alliances in efforts spearheaded by GM Vice Chairman Steve Girsky.

In March, GM agreed to pay $423 million for a 7 percent stake in French automaker Peugeot SA (PEUP.PA). Last August, Girsky negotiated a tie-up with Korean conglomerate LG Corp (003550.KS) to develop electric cars together.

The current talks are, however, still very much preliminary, said the person who declined to be identified because the discussions are private.

The re-emergence of GM as a strategic partner would help Isuzu share the burden of developing hybrid and other technologies as environmental regulations around the world tighten. The two firms also still cooperate in sales in Latin America and South Africa.

A stake of 33.4 percent in Japan gives the shareholder veto powers over boardroom decisions and would be worth about $3.2 billion at Isuzu's current share price. The Nikkei business daily has said that GM is seeking a holding of about 10 percent.

Isuzu said in a statement on Tuesday it was considering a wide range of partnerships, including but not limited to GM, adding that it had made no decision yet.

GM declined to comment. "While we do not comment on rumor and speculation, we routinely speak with other (automakers) on a range of issues," spokesman Klaus-Peter Martin said.

Toyota Motor Corp (7203.T) currently owns 5.9 percent of Isuzu in addition to a majority stake in rival truck maker Hino Motors Ltd (7205.T) and it remains unclear how Toyota will respond to GM's overtures to Isuzu.

Toyota bought its stake in Isuzu with a view to jointly develop small diesel engines - a forte of Isuzu's - but that project was shelved after the global financial crisis. Toyota recently signed a deal to use BMW AG's (BMWG.DE) diesel engines in Europe.

GM last year reclaimed its title as the world's top-selling automaker from Toyota thanks to rapid growth in China, but it is a minor player in fast-growing Southeast Asian markets, where Toyota and other Japanese brands dominate.

Isuzu had been discussing a possible tie-up with Volkswagen AG (VOWG_p.DE) with little progress.

Japan's other truck makers are all aligned with strategic partners: UD Trucks, formerly called Nissan Diesel, belongs to Sweden's Volvo AB (VOLVb.ST) and Mitsubishi Fuso belongs to Daimler AG (DAIGn.DE).

Isuzu's top shareholders are trading houses Mitsubishi Corp (8058.T) and Itochu Corp (8001.T), with 9.2 percent and 8.0 percent, respectively, followed by Toyota.

Shares in Isuzu were trading up 1 percent on Wednesday morning in Tokyo, in line with the transport sector index .ITEQP.T. ($1 = 0.7561 euros)

(Additional reporting by Emi Emoto and Chang-Ran Kim in TOKYO, Ben Klayman in DETROIT; Writing by Chang-Ran Kim; Editing by Edwina Gibbs)

• A Permanent Economic Emergency