DaimlerChrysler AG

(DCX)

is reportedly in discussions to buy a 30% stake in

Mitsubishi Motors

, Japan's No. 4 automaker.

The companies have entered the final stages, and will likely announce a deal by the end of this month, according to the

Nihon Keizai Shimbun

economic daily in Japan.

The report said the deal would include collaboration on the development of subcompact cars.

A tie-up between the two automakers would make them collectively larger than

Toyota Motor

(TM) - Get Report

, and the group would become the world's third-largest auto maker behind

Ford Motor

(F) - Get Report

and

General Motors

(GM) - Get Report

.

Mitsubishi would not comment on the deal, but a spokesman said it is discussing various business ventures with other automakers.

The report said DaimlerChrysler chairman Jurgen Schrempp met last week with Mitsubishi president Katsuhiko Kawasoe at the

Geneva International Motor Show

and began discussing a potential deal between the two companies.

The companies already have some cooperative agreements. Mitsubishi produces 60,000 passenger cars a year at a U.S. plant, which are sold under the Chrysler name.

Mitsubish also produces trucks and busses in an equity alliance with Sweden's

Volvo

.

DaimlerChrysler president Robert Eaton has previously said he hopes to build the German-American automaker into the top auto producer in the world. Mitsubishi Corp. executives have previously said they have little objection to the introduction of foreign capital into subsidiary Mitsubishi Motors.

DaimlerChrysler closed Monday trading down 1 7/16 to 62 1/8.