Chrysler Inks Minicar Deal with Nissan

January 11, 2008
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Chrysler LLC signed has signed an agreement to take Mexican-made Nissan Versa’s and re-badge them for sale across South America. Chrysler vice chairman Tom LaSorda insisted the agreement was limited and ducked questions about whether Chrysler and Nissan were prepared to extend the partnership from small to full-size pickup trucks.

Significantly, the new venture does not bar the way for another small car partnership, this one between Chrysler and China’s Chery Motors. If anything, said LaSorda, the U.S. maker plans to commit more than 300 engineers to its project with Chery as it continues to look for ways to expand its reach beyond North America.

The venture between Chrysler and Nissan appears to be significantly more limited than the automotive rumor mill had anticipated, focusing specifically on Chrysler’s plans to distribute a Mexican-built version of the Nissan Versa (shown above), and only in South America.

“The press likes to get ahead of itself. There are no other announcements at this time,” LaSorda said. However, Nissan and Chrysler will continue to talk about other areas of cooperation, he acknowledged. “The groups are continuing to dialogue,” LaSorda said during a conference call.

Speculation that Chrysler and Nissan would reach some kind of agreement has proliferated ever since last fall when Renault-Nissan CEO Carlos Ghosn said an alliance between the two companies could make a lot of sense.

LaSorda, however, said the key to any tactical alliance is that they have to be a “win-win” for both companies. “This kind of tactical partnership allows us to maximize product offerings yet minimize costly investments -- such as new plant infrastructure, tooling and R&D,” LaSorda said. “This partnership will give Chrysler nearly immediate access to vehicle segments in which we do not currently compete.”

“Nissan has a successful track-record of win-win product exchanges and we are pleased to be entering into this second agreement with Chrysler,” said Carlos Tavares, Executive Vice President, Nissan Motor Company.

LaSorda noted that Chrysler and Nissan already share products from a joint venture that was set up a number of years ago to for produce CVT transmission and indicated the two companies speak regularly about the potential for other joint projects. The industry will see more such alliances in the future, he predicted. “It’s a very good way to into the market without a lot of capital investment,” he said.

Chrysler officials also emphasized that new agreement does not indicate they are dissatisfied in any way with the state of the relationship with the company’s Chinese partner, Chery Motors, despite rumors that this venture hasn’t been proceeding along very well. “We have a cooperation outline with Chery that continues to be developed, LaSorda said.

Mike Manley, Chrysler executive vice president of international sales and business development, said the Nissan deal won’t have any impact on the company’s collaboration with Chery now or in the future. “Chery remains for a us a very important partner for us,” he said. “This does not impact our plans with Chery. Chery still has opportunity in Latin America,” said Manley, adding it’s quite possible Chrysler will sell both Nissan-made and Chery-made vehicles in Latin America.

LasSorda said Chrysler will be providing more “direct support” for Chery. It has 150 engineers assigned to collaborate with Chery and that number should double in the next year. The first car made by Chery for Chrysler could go on sale as soon as next year but it will probably be “another three or four years,” before Chrysler is prepared to sell a Chery-made vehicle in the United States or Western Europe.

Chrysler sales in South America climbed 22 percent last year and it remains very much a target of the opportunity for the company, which is trying to grow beyond it’s North American base, he said. Unlike its cross-town rivals, who now sell more cars overseas than they do in the U.S., only about 9 percent of total Chrysler volume was generated outside North America in 2007.

LaSorda, however, said Chrysler hasn’t decided exactly where the Nissan-made vehicles will be soldor how they will be badged. “We haven’t picked a name yet,” he said.

2008 Nissan Versa: What’s New, Sport touches Nissan’s compact sedan. by Marty Padgett (2007-06-25)

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