UPDATE 1-China's Beijing Auto interested in Volvo -WSJ

BAIC currently only mades Mercedes-Benz and Accent cars at joint ventures with Daimler AG (DAIGn.DE) and South Korea's Hyundai Motor (005360.KS).

"BAIC doesn't even have a in-house design car brand so far. How can anyone realistically expect it to take over and turn around Opel or Volvo?" asked the source, who was not authorised to speak publicly on the matter.

One of the people told Wall Street Journal that BAIC's interest was "preliminary" and "nascent."

Geely Automobile, which has also been talked about as a potential bidder for Volvo and GM's Swedish unit Saab, said last month that it has no intention of making a takeover offer for either Volvo or Saab. [ID:nHKG309232]

Earlier this month, little known Chinese machinery maker Tengzhong Heavy Industrial Machinery agreed a tentative deal with GM on its Hummer unit, but faces challenges completing the purchase. [ID:nPEK281493]

Chinese state media has run lengthy commentaries predicting the deal could be vetoed by the Chinese government as it runs against Beijing's policies to promote small and clean cars. (Additional reporting by Ajay Kamalakaran in Bangalore; Editing by Lincoln Feast)