Mercedes wants to replace the A-Class by 2011 and the B-Class a year later and a partner for the two models could help Mercedes cut costs.

"We have to accept that Mercedes alone will not achieve volumes some of our global competitors have," said Thomas Weber, DaimlerChrysler board member for r&d. "We are thinking about our strategy for the next generation of these cars."

And sources from Mercedes says that the PSA/Peugeot-Citroen is considered a potential candidate. PSA already has a joint venture with Mercedes rival BMW to build gasoline engines for BMW’s Mini and for PSA’s small cars.

"We talk with everybody about everything. We do not have a final project with Mercedes, though," said Gilles Michel, PSA’s board member responsible for platforms, technology development and purchasing.

Source: Autoweek

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