Nissan and Daimler, who signed a co-operation agreement in 2010 with Nissan’s alliance partner Renault, plan to start joint assembly of passenger cars in Mexico from early 2014 at a new 200,000 capacity factory, the Nikkei business daily reported.

The factory will make cars for both brands for sale mainly in North America. The Nikkei estimated that the investment needed will be around US$1bn.

Nissan already has two plants in Mexico, at Aguascalientes and Cuernavaca, producing around  700,000 vehicles, mostly for the US and Latin America. Daimler's manufacturing facilities in Mexico produce large trucks and buses; the joint venture would mark its first passenger car production there.

The Nikkei said that Nissan will build the Mexican plant with Daimler taking a capital stake in the operating company. The plant could also build Infiniti models, all of which are currently built in Japan, to offset the strength of the yen.

A Nissan spokesman declined to confirm the Nikkei report but told Reuters "Nissan continues to grow throughout the world and in order to reach the objectives of our strategic business plan we continue to study opportunities to install additional capacity in key markets.

"We have made no announcements concerning adding manufacturing capacity in Mexico and have nothing further to add at this time."

Daimler also declined to comment on the report but a spokesperson said that the two companies were looking at a number of options for co-operation.

The three companies have previously announced that they will jointly develop engines and cars, starting with Renault Twingo/Daimler Smart while Infiniti, Nissan’s luxury brand, will use Daimler engines in future models.