The smaller Maybach 51 would be based on the Mercedes S-class platform and compete with an entry-level Rolls Royce currently being developed by its German owners BMW, reported Germany's auto motor und sport magazine.
Priced at around $256 000, the mini-Maybach would appeal to a slightly-less affluent clientele than attracted to the top-of-the-range models, the Maybach 57 and 62 which cost up to $385 000.
Buoyant sales of Bentley's Continental Flying Spur model had highlighted the potential of the segment, said the report.
The 5.10-metre car is likely to be less conservatively-styled than its big brother and could go on sale from 2009/10.
Maybach already has a range of engine options at its disposal, with V12 and V8 units offering between 373 and 447 kW of power.
DaimlerChrysler refused to comment on the report, but the
usually well-informed motoring magazine said development on the project was at an advanced stage.