The Renault-Nissan alliance has agreed to raise its stake in Lada-owner Avtovaz to more than 50%, the BBC has learnt.
The French-Japanese alliance partners hope that taking a controlling stake in the Russian carmaker should result in closer collaboration between the three and bring about economies of scale.
As part of the deal, Renault and Nissan models could be produced alongside Ladas in Togliatti, Russia.
The deal will come into force by 2014.
A memorandum of understanding to that effect has been signed in Paris, four years after Renault first acquired a 25% stake in Avtovaz.
A new production line was inaugurated last month in the Togliatti plant, backed by a 400m-euro ($525m; £330m) investment.
The three marques aim to produce 1.6 million cars a year there, which would make it one of the biggest assembly plants in the world.
Lada's owner Avtovaz is set to benefit from access to Renault-Nissan developed technology.
This should help it modernise its cars, which is vital in the face of ever tougher competition from foreign carmakers.
In return, Avtovaz's dominant position in the Russian car market should help Renault and Nissan win over more customers.
Carlos Ghosn, who is chief executive of both Renault and Nissan, believes it is vital to be strong in this market as Russia becomes an engine for economic growth in Europe.
Renault and Nissan are tied together by cross-ownership of shares in each other.
The alliance, if considered as a whole, is the world's fourth largest carmaker by volume.
Renault holds a 43.4% stake in Nissan, while Nissan holds 15% of Renault shares.
Both companies will be holding shares in Avtovaz, but neither firm is expected to hold a majority stake in Avtovaz on its own.
However, the two carmakers share one chief executive, Carlos Ghosn, so they are likely to act as a single majority owner.
Mr Ghosn has also initiated a number of co-operation agreements with Daimler, the German industrial group that owns Mercedes and Smart.
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