Nissan Motor Co. will supply cars to Chrysler LLC to sell in South America as the U.S. carmaker seeks to expand its product range while holding down investment costs, the two firms announced Friday.
The agreement calls for Nissan to make a version of the 1,800 cc Versa compact at its Mexico plant to be sold under the Chrysler brand starting in 2009. The vehicle is sold as the Tiida Latio in Japan.
It will be the first time for Nissan to supply vehicles to a U.S. automaker under an original equipment manufacturer contract.
The number of units to be supplied will de determined later depending on sales trends, according to the pact.
The project adds to a growing list of partnerships aimed at expanding product lineups and utilizing assembly plant capacity with minimal investment.
As it battles two years of losses, Chrysler is expected to gain from the addition of the fuel-efficient compact to its product lineup. The deal will also enable Nissan to expand volume of its North American production and cut costs.
"This partnership will give Chrysler nearly immediate access to vehicle segments in which we do not currently compete," Chrysler President Tom LaSorda said.
The two carmakers said they may explore further cooperation. Nissan Chief Executive Officer Carlos Ghosn has said he wants a U.S. partner, after General Motors Corp. rejected an alliance 15 months ago. Nissan and Chrysler have been in talks since December about some form of a tieup, including mutual supply of vehicles, although they have indicated the partnership would not involve equity.