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Mercedes is in discussions with Manor regarding an engine supply for the 2016 Formula 1 season.

Manor is using one-year-old Ferrari power units this term while Mercedes has customer deals with Williams, Force India and Lotus alongside its own team.

If Renault completes its talks to take over Lotus, Mercedes could have capacity to supply an alternative team - and has now decided against a potential deal with Red Bull.

Mercedes' head of motorsport Toto Wolff confirmed Manor was a possibility.

"On the engine, we had some discussions and they're interested in exploring the competitive environment," he told AUTOSPORT.

"They have a Ferrari engine today but it's a young team and a new team and they need to meet with all engine suppliers and make the best deal for yourself.

"This is why we've been talking to them."

A Manor source confirmed talks have taken place between the two parties.

Mercedes needed to get dispensation from the FIA for four teams to have its engine this year as the regulations state a single manufacturer can only supply a maximum of three teams.

"It's a capacity question [with Manor] and at the bottom we don't know what is happening with Lotus and Renault and this is why you have to keep all options open," added Wolff.

WOLFF KEEN ON WEHRLEIN PROMOTION

Wolff said there have been no talks with Manor regarding putting one of Mercedes' drivers in the car, but he remains keen to get the team's reserve Pascal Wehrlein into an F1 seat.

The German currently races in the DTM, and had been linked to a Force India F1 race seat after testing for the team.

"We haven't talked to Manor about drivers yet because I think it's too early," said Wolff.

"I'm a keen supporter of Pascal because he's doing a great job in the DTM and he was an outstanding kid in F3 as well.

"So I definitely see him having the potential to go into F1.

"But at the moment my agenda is purely concentrated on the racing team and locking in the championship.

"The next step is going to hopefully have Pascal in the right seat.

"Force India was an opportunity and that door closed.

"Now it's about looking at the market overall and the other teams, but we are not under pressure.

"We need to find the right seat for him."