Carmakers Renault-Nissan and Daimler are to join forces to build small cars in Mexico, a source close to the negotiations told AFP on Thursday.
The joint production activities "will not involve big cars and will be in Mexico," the source said.
Contacted by AFP, a spokesman for Daimler, which owns the Mercedes-Benz brand, declined to comment, but said the Franco-Japanese and German groups were scheduled to hold a joint news conference on Friday.
Daimler chief Dieter Zetsche and his counterpart at Renault-Nissan, Carlos Ghosn, would "present a new cooperation project, the biggest so far in the long-running collaboration between the two groups," according to the invitation to the conference.
Japanese daily Nikkei recently reported, without revealing its sources, that the two automakers were on the point of signing a deal to build new luxury small cars at a production line in Nissan's Mexican plant.
The newspaper said production would begin in 2017.
The two groups have collaborated since April 2010.