June 26, 2014 / 7:58 AM / in 3 years

Daimler and Nissan approve joint Mexico production: sources

PARIS/STUTTGART (Reuters) - Daimler (DAIGn.DE) and Nissan (7201.T) have finalized a joint venture deal to build future Mercedes and Infiniti compact cars in Mexico, sources with knowledge of the matter said on Thursday as the automakers called a news conference to unveil the plans.

Dieter Zetsche (R), chief executive officer of German car manufacturer Daimler AG, and Carlos Ghosn (L), chief executive officer of Renault-Nissan Alliance, hold a news conference before signing an agreement in Brussels April 7, 2010. REUTERS/Thierry Roge

The companies are preparing to announce a “substantial investment” to develop the vehicles on Daimler’s front wheel-drive architecture and assemble them at Nissan’s Aguascalientes site northeast of Guadalajara, the sources said.

The 50-50 venture, first reported by Reuters in March, 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 Chief Executive Dieter Zetsche and his Renault-Nissan counterpart Carlos Ghosn will unveil a new cooperation deal at a 1330 GMT (9.30 a.m. EDT) 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.

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.

The compact car plans, set out in a February memorandum of understanding, 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, 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.

Additional reporting by Edward Taylor in Frankfurt; Editing by Jason Neely and Mark Potter

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