German carmaker Daimler is in talks with Austrian-Canadian machinery maker Magna on moving production of the Mercedes G-Class sport utility vehicle to Hungary, Austrian daily Kleine Zeitung said on Thursday, citing a Magna official.

If Magna does not agree on changed conditions, Daimler could move production of the vehicles to its new plant in Kecskemet, central Hungary, in 2013, the paper said. Daimler wants an answer from Magna on the matter by the end of January, it added.

Magna CEO Gunther Apfalter confirmed the talks were underway and told the paper he trusted production of the vehicles would remain in Graz.

Another Austrian newspaper, Kurier, said Magna was "thinking hard" about opening a new base in Central Europe, in part because of the talks with Daimler.

Mr Apfalter conceded production costs were lower in Hungary than in Austria - per-hour labour costs in Hungary are about €9 compared to €24 in Austria - but he said Magna wanted to keep the plant in Graz.

Magna made about 7,200 G-Class vehicles in 2011 and the number is set to rise to 8,500 in 2012. By 2013, production numbers could climb to 10,000.

Magna already has about 150 employees in Hungary.

Daimler is building a €800m compact car plant in Kecskemet. The first serial production model is set to roll of the line in Q1 2012.