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2008-04-15 09:48

Dee-Ann Durbin & Tom Krisher

Nissan said it will make a new small car designed by Chrysler and Chrysler will make a full-size pickup truck designed by Nissan.

The agreement is part of a growing relationship between Chrysler and the No. 3 Japanese carmaker as they attempt to adapt to a US marketvbuffeted by the economic slowdown and rising fuel prices.

Both products will be sold in North America, and the new Chrysler subcompact will also be sold in Europe and other global markets starting in 2010. No financial details were disclosed.

The new Chrysler small car will be made at Nissan's Oppama plant in Japan. Chrysler will make the pickup truck at its plant in Saltillo, Mexico, and it will go on sale in 2011, the companies said.

The Nissan Titan, Nissan's current full-size pickup, will remain on the market until the new pickup goes on sale, said Dominique Thormann, senior vice president for administration and finance at Nissan North America.

The Canton, Mississippi, plant that makes the Titan will start producing commercial vehicles for Nissan and no jobs will be lost, Thormann said.

To clear room to build the Nissan pickup in Saltillo, Chrysler will shift production of its own pickup trucks from Mexico to truck plants in St Louis and Warren, Chrysler President and vice chairman Tom LaSorda said.

"Forging the right tactical partnerships is critical to the long-term success of Chrysler," LaSorda said in the statement.

Thormann and LaSorda said that the agreement is limited to the two vehicles and there are no ongoing merger discussions, but Thormann did say both companies would continue to consider product-sharing opportunities.


Aaron Bragman, an analyst with the consulting company Global Insight, said the agreement doesn't necessarily mean Chrysler is headed for a full-fledged alliance with Nissan-Renault, although the two carmakers are a good fit for Chrysler.

Such deals allow carmakers to play to their strengths and share the risk and capital costs of bringing products to market.

"I think this is exactly the kind of thing that Chrysler needs to be doing to guarantee its future," Bragman said.

In January the two companies announced a deal for Nissan to supply versions of its Versa subcompact for Chrysler to sell in undisclosed parts of South America. No specific terms were announced.

Under the new deal, both the Chrysler subcompact built by Nissan and the pickup truck built by Chrysler will be unique designs, although LaSorda said they will share some mechanical underpinnings.

Thormann said the agreement will allow Nissan to offer more cab and engine configurations than it does now. He wouldn't say whether Nissan will take advantage of Chrysler's hybrid technology, which was developed in conjunction with General Motors and BMW. Chrysler plans to bring a hybrid version of its Dodge Ram pickup to market in 2010.


Thormann said US pickup sales have been declining since the Titan was released in 2004, but he said there are still 2 million full-size pickups sold in the US each year.

"It's still a very attractive segment to have a product offering in," he said.

Titan sales fell 9% in 2007. In the first quarter of this year, Titan sales plummeted about 40%. They were the victim of heated competition - the new Dodge Ram and Ford F-150 will be out later this year - and a slowdown in housing construction.

Chrysler has been desperate for a small car in North America as high fuel prices send consumers away from its trucks and sport utility vehicles to more fuel-efficient models. US subcompact sales were up about 30% in the first three months of this year, and LaSorda said the global demand for subcompacts tops 10 million cars per year.

"I think the timing is good. I wish I had them now but I'll wait for great cars," LaSorda said. He said Chrysler has already finished designing its subcompact.

LaSorda said this deal won't affect ongoing talks with Chinese carmaker Chery Automobile to make small cars for Chrysler to export to the US and Western Europe.

"We believe we need more than one small car for NAFTA, so we will be counting on Chery to help us with that," he said, referring to sales in the US, Canada and Mexico.


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