DaimlerChrysler and Volkswagen have been in talks for years about a possible tie-up, but have never managed to strike a deal, it has been revealed.
Dieter Zetsche poses with the Jeep Hurricane earlier this year in Detroit
They discussed cross-shareholding "a number of times in recent years", DaimlerChrysler said, but those talks never came to anything.
Cross-shareholding was designed to protect each other from a hostile bid.
A German press report on Friday said the two sides agreed each would take less than 20% of the other's shares.
The revelation comes two weeks after Porsche said it would increase its stake in VW to 20%.
Door still open
However, analysts believe the door between Daimler and VW is far from closed.
DaimlerChrysler's incoming chairman Dieter Zetsche is said to be supportive of cross-shareholdings with VW. He takes the driving seat at the start of next year.
Current chief executive Juergen Schrempp is said to be opposed to any tie-up with VW, but happy to leave the final decision to Mr Zetsche.
According to MM Warburg analyst Marc-Rene Tonn, both Daimler and VW would benefit from co-operation, with Daimler's luxury car brand Mercedes helping VW cover the niche market.
At the same time, VW's technical expertise could benefit Mercedes.
"But financial shareholdings are not necessary for such co-operation," Mr Tonn said.