Chery Automobile and Jaguar and Land Rover are seeking regulatory approval to set up a joint venture in China, the China Business News said on Monday.
The two companies have basically finished discussions for a manufacturing tie-up, the newspaper said cited an unnamed source.
Chery spokesman said he had no information about it, so did a representative from Jaguar and Land Rover.
Chery and Fuji Heavy Industries had planned to make Subaru vehicles in China. But they have been unable to get regulatory approval due to potential conflicts with Beijing's industry policy.
Jaguar and Land Rover, controlled by Tata Motors, had also been looking for a Chinese partner and had contacted a slew of auto makers, including Great Wall Motor Co.