Stuttgart, Germany  - Daimler is studying plans to build a car factory using low-cost labour in eastern Europe, with options to be presented to its board on Monday, two German magazines said Saturday.

Poland, Romania and Hungary were under consideration as locations, said the fortnightly Auto Motor und Sport and the weekly Automobilwoche. Auto Motor und Sport said Serbia was also in the running. Both suggested Romania was the least favoured location.

Mercedes Car Group needed a second factory to build the next generation of its A-Class and B-Class cars while continuing to manufacture at its car factory at Rastatt, Germany. A new site would allow a wider range of models and lower production costs.

Daimler declined comment when approached Saturday to confirm the two periodicals' reports.

Mercedes is counting on its A and B compact cars to sharply boost its sales in its western European core market from 2012 and reduce the overall carbon-dioxide emissions from Mercedes-Benz cars, as required under new European Union global-warming policy.

Automobilwoche said the eastern Europe site was needed to make 100,000 cars annually, while Rastatt would make 280,000.

General Motors' European arm Opel meanwhile said it would alter its main factory at Ruesselsheim, west of Frankfurt, to build small cars as well as its mid-sized Vectra model as at present. The Vectra is about to be replaced by the Opel Insignia.

A spokesman declined to say when output of smaller models would begin at Ruesselsheim. (dpa)