GAZ, billionaire Oleg Deripaska's automaker, will partner General Motors in Italian engine maker VM Motori, after agreeing to buy the 50 percent the U.S. company does not own.

GAZ will gain the right to build the Italian producer's light-diesel engines in Russia under license after acquiring the stake from Detroit-based Penske, Yelena Matveyeva, a spokeswoman for Deripaska's Russian Machines transportation division, said Wednesday. She declined to disclose the financial terms.

GAZ and GM are seeking to benefit from a "significant increase" in demand for diesel engines, the companies said in a statement. Russia surpassed Germany to become Europe's largest market for cars and light commercial vehicles, as spending rose 64 percent to a $33.8 billion in the first half of the year, PricewaterhouseCoopers said in a July 9 report.

"Our joint venture agreement with GAZ Group provides business opportunities to expand our diesel engine business with new customers," Mike Arcamone, vice president of GM Powertrain Europe, said in the statement.

Russia's largest maker of light commercial vehicles intends to license VM Motori technology to build 200,000 to 300,000 light-diesel engines a year locally, starting in about two or three years, Matveyeva said. The engines will largely replace imports and lower the cost per engine by as much as 20 percent, she said.

GM is the best-selling foreign carmaker in Russia, led by its Chevrolet and Opel brands.