Sanctioned businessman Oleg Deripaska has been seeking to divest his stake in GAZ as part of a potential deal with the United States to lift its sanctions on the company and VW was viewed as a possible buyer.

Washington dropped sanctions on Deripaska's core empire - aluminium giant Rusal and its parent En+ - in December after he reduced his stake in the businesses.

"At the moment this (a deal to buy a share in GAZ) is not possible for us because of sanctions ... Talks are suspended," RIA quoted Marcus Osegowitsch, Volkswagen's Russia head, as saying.

Sources told Reuters in December 2017 that Volkswagen was in talks to buy a stake in GAZ.

(Reporting by Gleb Stolyarov and Gabrielle Tétrault-Farber; writing by Tom Balmforth; editing by Kirsten Donovan and David Goodman)