Mercedes chief Dieter Zetsche made the proposal to Renault's leadership to co-develop premium vehicles.

Mercedes-Benz chief Dieter Zetsche has offered Renault the chance to co-develop premium cars.

According to a report in a German newspaper, Zetsche told Renault's leadership he would consider creating premium vehicles within the framework of the alliance shared by the two automakers. In April 2010, Mercedes-Benz parent company Daimler and Renault signed a broad-ranging alliance agreement which would see the two automakers co-develop products and share engines.

"Everything is possible, so long as it makes sense commercially for both partners. Mr. Zetsche said the premium segment is not taboo. One has to explore this," said Jerome Stoll, executive vice president for sales and marketing at Renault.

Renault is already in the process of developing new premium models of its own, according to Stoll, such as the new Espace minivan due in 2014.

An alliance with Renault makes sense for Mercedes-Benz, which can use Renault's expertise in building small cars to create competitive products in the compact premium segments. Renault can use Mercedes-Benz know-how to create premium products for itself as well as for sibling brands Nissan and Infiniti.

Gallery: Mercedes-Benz and Renault could develop a premium car together