Exclusive: Mercedes, Infiniti to pool small cars, plant - sources

Tue Mar 4, 2014 4:06pm EST
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By Laurence Frost and Edward Taylor

GENEVA (Reuters) - Daimler's (DAIGn.DE: Quote) Mercedes and Nissan's (7201.T: Quote) Infiniti plan to pool development of compact cars to cut costs, expand the German carmaker's North American production and broaden the Infiniti lineup, people familiar with the matter said.

The outline deal, which reinforces Daimler's relationship with the Renault-Nissan alliance, will see Nissan build the next-generation Mercedes GLA sport utility vehicle and related models in Mexico alongside all-new cars for its own Infiniti brand, said the sources, who asked not to be identified.

The plans are due to be presented to the Daimler board for approval as soon as April, the sources said, with the first jointly manufactured vehicles expected in late 2017.

Daimler and Nissan have said they are looking to increase cooperation in smaller premium cars, but neither carmaker would confirm the Mexico production plan on Tuesday.

The companies have yet to reach a "joint formal decision", Infiniti CEO Johan de Nysschen said in an interview at the Geneva auto show. "But Mexico does have a lot going for it," he added, including tariff-free exports to the U.S. and Europe.

Mercedes, Nissan and alliance partner Renault (RENA.PA: Quote) have shared engines, plants and vehicle architectures for small cars and vans since Daimler CEO Dieter Zetsche and Renault-Nissan boss Carlos Ghosn announced a broad-based partnership in 2010, underpinned by token reciprocal shareholdings.

The latest agreement will help Infiniti to fill a big gap at the bottom end of its model range with a new SUV, sedan and coupe built with the same parts and architecture as successors to the Mercedes A- and B-Class, GLA and CLA, the sources said.

In return, Daimler gets a first North American production site for its front-wheel drive "MFA" architecture, development savings and economies of scale - in a vehicle category where it has struggled in the past with low profitability.   Continued...

The emblem of German car Mercedes-Benz is pictured on the wheel rim of a Mercedes-Benz S-class at the plant in Sindelfingen near StuttgartJanuary 24, 2014. REUTERS/Michaela Rehle