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Wednesday, August 29, 2007, 11:00 am PT (02:00 pm ET)

Report claims Apple talking with Volkswagen over 'iCar'

Readers may want to take this one with a bag of rock salt, but German magazine Capital is reporting that Apple and automaker Volkswagen have engaged in early discussions over a concept car dubbed "iCar."

The report — available via Google translation — claims that Volkswagen chief executive Martin Winterkorn recently flew to California where he sat down for a brainstorming session with Apple's Steve Jobs.

Though still in the early planning stages, the two firms reportedly plan to cooperate on the development of a new generation of Volkswagen compact cars that would include several Apple tie-ins.

Experts cited in the report say compact cars that come loaded with several pieces of Apple gear could serve as a particular draw amongst younger-generation customers.

Apple presently works with several automakers, including BMW, for iPod and iPhone integration. There have also been rumors that the company has teamed up with another German automaker, Mercedes-Benz, to develop a radically new dashboard navigation system due out next year.