Nissan, Daimler to Finalize Deal on Mexico Joint Venture

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TOKYO -- Nissan Motor and German carmaker Daimler AG have decided to jointly produce luxury subcompact cars in Mexico beginning in 2017 in a bid to cut investment costs and export luxury models to the U.S. market, people close to the matter told The Nikkei on Saturday.

The two automakers will likely finalize the deal soon and are expected to announce their decision by the end of this month, these people said.Under the plans, the companies will set up a joint venture firm and spend tens of billions of yen (tens of millions of dollars) to set up a new production line in Nissan's passenger car plant in Mexico's central state of Aguascalientes. They will likely turn out a total of 100,000 to 150,000 units a year.

They will manufacture front-wheel-drive luxury subcompacts using Daimler platform. The joint venture firm will start producing Nissan's luxury Infiniti model first in 2017 and then Daimler's Mercedes-Benz. The two carmakers will sell jointly produced vehicles under their respective brands.

In 2010, the Japanese and German automakers formed a capital tie-up. Nissan has since acquired engines for luxury cars, among other things, from Daimler, but this will be the first time the two companies will work together to produce finished cars.

Since Daimler has solid know-how on luxury car production, Nissan aims to boost its cars' brand appeal through this joint venture. Meanwhile, Daimler seeks to acquire the capacity to produce luxury subcompacts for the U.S. market by using Nissan's large production base in Mexico.

[readon1 url="http://asia.nikkei.com/Business/Deals/Nissan-Daimler-to-finalize-deal-on-Mexico-joint-venture"]Source:asia.nikkei.com/[/readon1]