Chinese automaker Beijing Automotive Industry Holding Company is in talks to acquire Fujian Motor Industry Group as it proceeds on the road to expansion, people familiar with the matter said.

Beijing Auto, the Chinese partner of Hyundai Motor and Daimler, reportedly approached financially troubled Fujian Motor, whose major passenger-car subsidiary is Southeast Motor Corp, last year over the potential acquisition. Fujian Motor makes commercial vehicles with Daimler AG in Fuzhou, while Beijing Auto assembles Benz cars with Daimler in Beijing.

Another source said the government's push for a consolidation of the fragmented auto industry propelled Beijing Auto, also known as Beiqi, to make a move in an effort to beat Guangzhou Automotive Industry Corp to the acquisition. The deal still depends on government approval, the source added.

Beiqi had earlier eyed Changfeng Motors as a takeover target, part of a strategy to increase its capacity for sport-utility vehicles, the source added. Changfeng, the Chinese partner of Mitsubishi Motors, builds SUVs in Changsha in Hunan Province.