Volkswagen is expected to take a stake in Suzuki by the end of 2009, German industry publication Automobilwoche report, citing an unnamed Suzuki executive.
"We expect that there will be a basic agreement this year," the publication quoted the executive as saying on the sidelines of this year's Frankfurt auto show.
"For Suzuki and VW this connection would be a win-win situation. Suzuki would have access to a variety of VW's technology, while Volkswagen would have a solid supporting leg in India and Southeast Asia," the manager said.
Volkswagen declined to comment on the report while Suzuki Germany was not immediately available for comment.
There has been speculation previously that VW would be interested in a tie-up with Suzuki and a person familiar with the matter had told Reuters in August that talks had take place.
Last Monday, VW's Chief Executive Martin Winterkorn said that the product portfolio of Suzuki would fit well with that of VW, declining to comment further.