Nissan to supply cars to Chrysler

 

Nissan and Chrysler have agreed to have Japan's number three automaker supply cars to Chrysler for sale in South America starting next year, the companies said.

The car model, based on the Nissan Versa sedan, will be supplied under what is called an OEM, or "original equipment manufacture," agreement in the auto industry.

That means Nissan Motor Co will supply the cars, which are also sold as Nissan models, to Chrysler LLC so the US automaker can sell them under its own brand.

Such OEM agreements are fairly common among automakers and are far short of a major alliance like the one Nissan has with Renault SA of France. But they can help cut costs and strengthen product offerings immediately.

Detailed terms of the agreement were not disclosed on Friday, but a top Nissan executive said talks will continue about sharing other products.

"We've agreed to maintain an open dialogue to explore further product opportunities," Dominique Thormann, senior vice president of administration and finance for Nissan in North America, told The Associated Press in a telephone interview.

"I can't tell you if this is going to be a one-shot ... transaction or ... blossom into something more," he said.

Nissan has flirted with the idea of a US partner, to solidify its position in North America, but its talks with US automaker General Motors Corp in 2006 fell apart.

And a Nissan affiliate has been supplying Chrysler with transmissions since 2004, the companies said in a joint release.

Nissan Chief Executive Carlos Ghosn, who also heads Renault, has said the company is open to partnerships if they have the potential to succeed like the Renault-Nissan alliance.

There also has been speculation that Chrysler may build pickup trucks for Nissan as part of the deal, but Thormann said that's not in the agreement.

"There's no quid pro quo," he said.

Chrysler and Nissan also said there are no plans to bring a Chrysler-branded Versa to North America.

Nissan will build the cars for Chrysler at a factory in Mexico, where the current Versa is produced and distributed to the United States, South America and other markets.

"This kind of tactical partnership allows us to maximize product offerings yet minimize costly investments," said Chrysler President Tom LaSorda, adding that the agreement will allow Chrysler to add a small car in its lineup.

"Nissan has a successful track record of win-win product exchanges, and we are pleased to be entering into this second agreement with Chrysler," said Carlos Tavares, Nissan Executive Vice President.

Chrysler, which makes the Jeep Wrangler and Dodge Charger, has been eager to expand international sales through tie-ups, partly to expand in emerging markets to offset declining US sales.

Nissan produces the March subcompact, Infiniti luxury models and GT-R sports car. It turned itself around from near-bankruptcy under the 1999 alliance with Renault.

Chrysler, which had been losing money, became a private company in August after Cerberus Capital Management LP became the majority owner, buying an 80.1 per cent stake from German automaker Daimler AG.

Last year, Chrysler announced a deal with China's biggest independent car company, Chery Automobile Co, to jointly produce and export small cars to Western Europe and the United States. (AP)