Infiniti’s compact model to be manufactured under contract by Magna Steyr image

Magna Steyr, the Canadian-Austrian auto supplier, is reportedly discussing with Nissan a contract to assemble Infiniti’s upcoming compact model.

Nissan and Magna Steyr are expected to finalize the deal for production at the factory in Graz, Austria, in early 2012. The Infiniti model will most likely be built on Mercedes’s MFA platform, also used by the second-generation A-Class and B-Class, according to Automotive News Europe, which cites information from the companies’ management.

Sources say Daimler will supply many preassembled parts to Infiniti, but none of the automakers confirmed the information. Infiniti wants production of the new model to be between 50,000 and 60,000 units a year, with the cars to be exported globally. According to sources, the new Infiniti will be offered with four and six-cylinder engines, both diesel and gasoline, sourced from Mercedes-Benz.

Infiniti’s compact offering will be a rival for the BMW 1 Series and the Audi A3, with design to be influenced by the Etherea concept car premiered at the 2011 Geneva auto show. The new model will play an important role in Infiniti’s plans to triple its sales to 500,000 units by March 2017.

By choosing Magna Steyr as a contract manufacturer, Infiniti avoids spending huge sums on building a new plant and also avoids development costs by using Mercedes parts.