Nissan Motor and Daimler plan to produce small luxury cars together starting as early as next autumn at a plant that the former is building in Mexico, the Nikkei reported.

The factory in Aguascalientes is expected to go onstream this year with an annual capacity to churn out 175,000 Nissan models. The Japanese automaker has indicated that it will spend up to US$2bn, or roughly JPY200bn, on the plant, including future expansion.

Nissan and Daimler plan to set up a production line for small cars under their Infiniti and Mercedes-Benz brands on the plant's grounds for a total cost of tens of billions of yen. The German automaker is expected to cover part of the cost. Initial annual production capacity will likely be around 150,000 units.

The two automakers hope to curb investment costs through joint production, with high-margin luxury vehicles to be exported to the strong US market. They have been discussing a tie-up in the production of passenger cars.

Nissan and Daimler formed a capital partnership in 2010 and the former is set to receive platforms for small cars from the latter. They will jointly manufacture cars using these platforms to curb costs.

The partners had earlier announced a plan to jointly produce fuel-efficient engines for luxury cars at a Nissan plant in the US starting next year.

Nissan aims to triple global Infiniti sales from the fiscal 2012 level to 500,000 units by fiscal 2016. Infiniti models are currently built in Japan and the US but the carmaker plans to begin production in China in 2014 and in the UK the following year. The Japanese automaker hopes to bolster its luxury car business through joint production with Daimler.