Daimler and Nissan approve joint Mexico production, report says

PARIS/STUTTGART (Reuters) -- Daimler and Nissan have finalized a joint venture deal to build future Mercedes and Infiniti compact cars in Mexico, sources with knowledge of the matter said today as the automakers called a news conference to unveil the plans.

The companies are preparing to announce a "substantial investment" to develop the vehicles on Daimler's front-wheel-drive architecture and build them at Nissan's Aguascalientes factory, the sources said.

The 50-50 venture will broaden Nissan's premium Infiniti lineup, expand Daimler's North American production and reinforce the German carmaker's relationship with the Renault-Nissan alliance.

Daimler CEO Dieter Zetsche and his Renault-Nissan counterpart Carlos Ghosn will unveil a new cooperation deal at a news conference on Friday, both companies said, declining to comment further. A separate news conference is to be held in Mexico.

The new manufacturing deal will be the "largest project in the global collaboration of Daimler and the Renault-Nissan Alliance," Daimler said.

Small Infiniti

The compact car plans will help Infiniti fill a gap at the bottom end of its range with a new SUV, sedan and coupe sharing parts and architecture with successors to the Mercedes A- and B-class models, GLA and CLA, sources have said.

In return, Daimler gets a first North American production line for its "MFA" vehicle architecture, as well as development savings and economies of scale in a vehicle category where it has struggled in the past with low profitability.

Daimler has not said which models it plans to build in Mexico. 

German business publication Manager Magazin on Sunday, citing unnamed company executives, said the company plans to build the next-generation CLA and a new A-class sedan variant at the Aguascalientes factory, which is about 300 miles northwest of Mexico City.

Analysts at International Strategy & Investment (ISI) expect Nissan and Mercedes to run joint production in Aguascalientes to export to the United States starting in 2017.

Mercedes, Nissan and alliance partner Renault have shared engines, plants and vehicle architectures for small cars and vans since Zetsche and Ghosn announced a broad-based partnership in 2010, underpinned by small reciprocal shareholdings.

BMW, Audi plans

Mexico is attracting investment by German premium automakers because of its free trade accords, a cheap and skilled labor force and proximity to the lucrative U.S. market.

BMW is nearing a decision to open a plant in Mexico to produce 3-series and 1-series cars and possibly Mini models, according to a report in the German business newspaper Handelsblatt last month. BMW is still deliberating on where to locate a new North American factory but will reach a decision before the summer break, CEO Norbert Reithofer said at an industry event on Wednesday, without saying which models would be built there.

Audi is building a factory in San Jose Chiapa, Mexico, with annual production capacity of about 150,000 vehicles to make the Q5 SUV starting in 2016.

Automotive News Europe contributed to this report

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