Mitsubishi Motors may not go through with plans to develop mid-sized cars with the Chrysler group, a German newspaper reportedly quoted a top Mitsubishi official as saying.

According to Reuters, the Handelsblatt business daily reported that Mitsubishi COO Hideyasu Tagaya was primarily interested in DaimlerChrysler’s compact Smart range of vehicles as MMC pares its model lineup amid limited budgets.

The paper reportedly quoted Tagaya as saying the mid-sized Chrysler platform was too bulky for Europe and Asia, but that a final decision on co-operating on these cars was still pending.

He reportedly said the Chrysler group was welcome to use the Mitsubishi Lancer platform for compact cars if it wished. “But we will only develop the Mitsubishi version,” he added.

He also said he thought it made sense for the four-door Smart Forfour and the Mitsubishi Colt to share a platform in the next model generation as well, Reuters added.

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The news agency noted that DaimlerChrysler has previously rejected reports that Mitsubishi was set to cancel some joint development pacts that had survived DaimlerChrysler’s surprise decision this year not to continue bailing out Japan’s only loss-making car company.

Any move by Mitsubishi to loosen its business alliance with DaimlerChrysler would deepen a rift between the allies at a time Mitsubishi is trying to recover from a scandal over covering up car defects that has driven customers away from the brand, the report said.

Reuters said the first cars with common platforms due to roll out in 2005 and 2006 include the redesigned Dodge Neon, Chrysler Sebring, Dodge Stratus and a successor to the Mitsubishi Galant.

In May Mitsubishi reportedly said it would continue developing and producing mid-sized engines and would maintain an agreement to buy pickup trucks from the Chrysler group in North America.

Reuters said the partners are still discussing ownership of NedCar production in the Netherlands, which the companies had planned a 50-50 joint venture. Mitsubishi currently owns all of NedCar, which was established in the 1990s to make the Volvo S/V40 and Mitsubishi Carisma model lines and now builds the new Mitsubishi Colt and Smart Forfours on the same platform using common engines.

The Handeslblatt reportedly quoted Tagaya as saying Mitsubishi wanted to sell part of its NedCar stake to Daimler to raise cash it desperately needs, but that both partners would keep stakes in the venture.

Daimler has said it will keep a stake in Mitsubishi for the time being, Reuters noted. It bought a stake in Mitsubishi in 2000 with a view to expanding in Asia, but its original 37% has fallen to below a quarter after Daimler stood aside when Mitsubishi raised fresh capital.

Debt-ridden Mitsubishi got a $4.5 billion rescue package from the Mitsubishi group and investment funds earlier this year as it struggles to recover from the cover-up scandal, the report added.