DaimlerChrysler's Chrysler Group has decided against a cooperation deal with German car maker Volkswagen to produce a new sub-compact car, a German magazine said on Saturday.

The Automobilwoche magazine said costs at Volkswagen's production platform for its small VW Polo model had been too high for Chrysler.

The U.S. car maker Chrysler has said it wanted to name a partner to produce a new sub-compact car by the end of the year and has confirmed it was talks with European and Asian car makers about a joint project.

A spokeswomen for Chrysler said the report was speculation as no decision on building a sub-compact car had been taken yet, while a spokesman for Volkswagen said the firm had never been in concrete talks with Chrysler to build such a car based on the VW Polo.