TORONTO (CP) - Magna International Inc. is negotiating with BMW AG to build a sport-utility-vehicle version of the auto maker's popular Mini cars, industry sources in Europe told The Globe and Mail.

 

The vehicle would be called the Mini Colorado, a source in Detroit told the newspaper Wednesday, and Magna's Steyr plant in Graz, Austria, would assemble about 65,000 of the vehicles annually.

 

In addition, Magna Steyr is in the running to assemble a roadster for Volkswagen AG, which would add another 20,000 vehicles to production at Graz, the Detroit source told The Globe.

 

The Mini has been a smash success for BMW, and the plant in Oxford, England, where it is manufactured is running flat out.

 

The new business would help offset the loss of the Chrysler 300 at Magna Steyr, which produced 26,400 copies of the 300 last year or about 10 percent of the 248,000 vehicles that came out of Graz.

 

Chrysler will announce Thursday that it is shifting production of the 300 to its own assembly plant in Brampton, Ont., where it will spend more than $1 billion to upgrade the plant for the next generation of the Brampton vehicles, which will include right-hand-drive and diesel-powered versions of the 300, The Globe said, citing sources.

 

Magna is negotiating with several auto makers, a high-ranking European industry source told the newspaper. Senior executives are confident the Canadian auto parts giant will win new assembly business to replace both the Chrysler 300 and, more important, the BMW X3 SUV, which BMW will begin manufacturing in South Carolina for the 2010 model year.

 

BMW sold 113,000 X3 models last year, which represented about 45 percent of the production at Graz.

 

Production of the Mercedes-Benz E-class is being brought in-house by DaimlerChrysler AG. Chrysler Group is also moving European minivan production out of Graz and shifting it to plants in Windsor, Ont., and St. Louis, ahead of its impending divorce from parent Daimler.

 

''Chrysler obviously needs to fill its own facilities and this is a quick way of doing that,'' one industry analyst said.

 

Neither Magna nor Chrysler officials would comment.

 

The Brampton plant has been scheduled all along to begin building the new versions of the vehicles in 2010. In addition to the 300, the Dodge Charger and Magnum cars are built in Brampton and it's scheduled to add the Dodge Challenger in 2008.

 

Shifting assembly of the right-hand-drive and diesel version of the cars will help compensate for the company scrapping a $700-million plan to use Brampton as the site for a new flagship car called the Chrysler Imperial.

 

The Imperial appears to be a victim of high gasoline prices and a move in Washington to dramatically tighten fuel economy regulations so that an auto maker's entire fleet will average 35 miles a gallon. At the moment, there are separate standards for cars and trucks. The Detroit auto makers have argued that a single standard will hurt them the most because their sales are heavily skewed to full-sized pickup trucks and sport utility vehicles.

 

The new versions of the cars coming out of Brampton will likely have Chrysler's new Phoenix V-6 engine. Fuel economy in that engine will be six-to-eight percent better than it is in the current six-cylinder Brampton-made cars.