Daimler is open to supplying Volvo with engines and could even take a small stake in the carmaker, Manager Magazin said, according to Reuters, suggesting increased cooperation between Mercedes-Benz and Geely.
According to the news agency, the magazine said Daimler could buy "a couple of percent" of Volvo Cars".
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Volvo declined to comment to Reuters and a Daimler spokesman said: "This is pure speculation which we will not comment on."
Reuters noted the chairman of Volvo owner Geely, Li Shufu, had quietly built a US$9bn stake in Daimler by the end of February, seeking to forge an alliance with the German carmaker as a way to counter the threat from new competitors such as Tesla, Google and Uber.
The news agency also noted Daimler chief executive Dieter Zetsche had welcomed the Geely chairman as a new shareholder and said any industrial alliance would depend on whether current China partner BAIC agrees.
The Beijing Benz JV builds the majority of Mercedes models sold in China, most special LWB models developed for that market. It is about to launch a saloon version of the redesigned A-Class.
