Mitsubishi Motors has denied a report that, with its main shareholder DaimlerChrysler, it will jointly develop a minicar to be marketed by 2006 in Japan and Europe, according to CBS Marketwatch.

According to the report, the Nihon Keizai Shimbun newspaper said on Tuesday that the two companies are aiming to mass produce a minicar for the market in Europe, where demand for smaller, fuel-efficient vehicles will grow due to strict environmental regulations.

But a spokesman for Mitsubishi flatly denied the report, CBS said. “I was shocked when I read the story,” Mitsubishi spokesman Toru Kawahata told CBS Marketwatch.

He reportedly added that Mitsubishi and DaimlerChrysler have discussed improving vehicle quality and safety by jointly developing cars, but they have not talked about developing a minicar together.

According to CBS, the Nikkei reported that Mitsubishi’s Japanese minicar, the 660cc Minica, would be the base for a jointly developed minicar and added that Mitsubishi’s Okayama plant in western Japan and a DaimlerChrysler European facility would both produce the car.

Mitsubishi and DaimlerChrysler have jointly developed the Smart forFour and Mitsubishi Colt ‘supermini’ models. The Colt is already on sale in Japan and will make its European debut next year, together with the Smart forFour that was recently shown to the motoring press in Zurich.

The forFour and the European Colt will both be built in the NedCar factory in the Netherlands, a plant constructed initially as a Volvo-Mitsubishi joint venture. It is now owned fully by Mitsubishi but Smart plans to take a 50% shareholding in 2004.