Fiat Chrysler Automobiles proposed a merger deal to Renault in late May but the former pulled its offer off the table within a matter of weeks.
However, both automakers are still keen on a merger and the talks between the two never ceased, Italy's Il Sole 24 Ore reported Wednesday, citing people familiar with the matter.
After FCA pulled its offer, it was reported at the time that FCA made the move after the French government, which owns 15 percent of Renault, sought a delay in negotiations to discuss things with Renault alliance partner Nissan.
Nissan has said it is open to the deal going ahead but remains cautious as a merger with FCA would provide Renault with more weight in pushing ahead with a subsequent merger with Nissan, which was a goal of Carlos Ghosn, the ousted chairman of Renault and Nissan who is facing charges of financial misconduct in Japan.
According to Il Sole 24 Ore's sources, Renault could reduce its stake in Nissan to give it an assurance that it can remain independent. Renault currently owns 43.4 percent of Nissan, while Nissan owns just 15 percent of Renault.
A merger between FCA and Renault would create the world's third biggest automaker based on volume, and with the volumes of Renault's alliance partners, Nissan and Mitsubishi, also thrown in, we're talking annual production of around 15 million vehicles, or a third more than what Toyota and Volkswagen Group each produce in a year.
FCA has said any merger wouldn't result in plants being closed. The automaker also sees the potential of approximately $5.6 billion in cost savings, on top of those existing savings realized by Renault through its alliance with Nissan and Mitsubishi. A lot of this would likely result from shared development of costly electrification and self-driving technologies.
Any deal would largely finish what FCA's former CEO, Sergio Marchionne, started in 2014 when he openly explored the idea of a merger with General Motors to help share the load on capital expenditure. Since then, rumors about an FCA merger with Renault compatriot PSA Group, as well as Volkswagen Group, Hyundai, and Chinese automaker Great Wall have also come and gone.