Porsche is planning to cancel its contract assembly deal with Magna Steyr.

Unnamed sources told Reuters Porsche wants to pull out of the deal to produce Cayman and Boxster models at Magna's facility in Austria because the company's future parent, Volkswagen, is to acquire units of insolvent German contract assembler Karmann.

A Porsche spokesman said there were ongoing talks with Magna, while VW did not comment.

Porsche planned to shift the production of the two sports cars from Valmet in Finland to Magna from 2012.