Daimler and Renault-Nissan set up a production joint venture in Mexico

Article by Andrew Christian, on June 27, 2014

Daimler and Nissan have reached final agreement to set up a 50-50 joint venture that will produce future Mercedes and Infiniti compact cars in Mexico, sources privy with the matter told Reuters. The carmakers are getting ready for an announcement of a "substantial investment" to develop the vehicles underpinned by Daimler's front-wheel-drive architecture and build them at Nissan's Aguascalientes site in Mexico.

The joint venture is expected to broaden Nissan's premium Infiniti lineup, expand Daimler's production in North American and boosts the carmakers’ relationship with each other. The carmakers said Daimler chief executive Dieter Zetsche and Renault-Nissan CEO Carlos Ghosn were to unveil the venture at a news conference Friday.

Daimler remarked that the new manufacturing agreement will be the "largest project in the global collaboration” of the German carmaker and the Renault-Nissan alliance. The agreement will help Infiniti fill a hole at the bottom end of its range; as its new SUV, sedan and coupe share parts and the MFA platform with successors to the Mercedes-Benz A-Class and B-Class models, GLA and CLA, sources have said.

In exchange, Daimler would have its first production line in North America for its "MFA" vehicle architecture. Daimler could also benefit from development savings as well economies of scale in the compact car segment.

While Daimler has not disclosed which models would be produced in Mexico. Manager Magazin cited company executives as saying that the carmaker is planning to build the next-generation CLA and a new A-class sedan variant at the Aguascalientes site.

Mercedes, Nissan and Renault have been sharing engines, facilities and vehicle platforms for small cars and vans since their current CEOS unveiled a broad-based partnership in 2010. Mexico is becoming a production hotbed for German luxury carmaker thanks to its free trade agreements, cheap and skilled labor force and proximity to the United.

Daimler’s German rival, BMW, is close to deciding whether to open a facility in Mexico that will build 3-series and 1-series cars and possibly Mini models, according to a report by Handelsblatt in May. BMW is CEO Norbert Reithofer remarked that a decision on where to locate a new site in North America will be out before the summer break. [source: Daimler]

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