Nissan, Merc eye Mexican tie-up

Nissan and Daimler will turn to Mexico as they continue ramping up their rapidly growing partnership. The German maker is planning to set up a plant of its own next to the $2billion assembly complex the Japanese maker plans to open in Aguascalientes, Mexico in 2013.

The Daimler plant would be used to produce a wide range of small luxury products for both the Mercedes-Benz brand and Nissan’s Infiniti division. These are expected to include the next-generation A-class and a production version of the Etherea concept, which will share Daimler’s new MFA small car architecture. But Daimler and Nissan are also likely to produce some new battery-based models in Aguascalientes, senior sources confirmed.

Officially, neither Daimler nor the Renault/Nissan Alliance would discuss the plan, though a spokesperson for the German company referred to a recent comment by CEO Dieter Zetsche in which he stressed that further joint ventures are under study.

The two makers have been looking for ways to co-operate since first teaming up in 2010. Just this month, Zetsche and Renault/Nissan CEO Carlos Ghosn jointly revealed they will produce a new line of four-cylinder engines at the Nissan powertrain plant in Decherd, Tennessee. It will be used in the new Mercedes C-class and some unnamed Infiniti and Nissan models.

Last autumn, during the Frankfurt motor show, Daimler confirmed that the new MFA compact luxury car “architecture” will be shared with Nissan for the upcoming production version of the Infiniti Etherea concept unveiled at the Geneva motor show in March 2011. Daimler, meanwhile, will use the MFA platform for at least five different models, including both the next-generation A- and B-class lines.

Nissan announced plans for its new Mexican assembly complex this week, noting that two existing plants there are now at capacity, producing a record 600,000 vehicles in 2012. The new factory will help bump that to one million units or more in the coming years. That will help satisfy growing demand in the region – while also allowing Nissan to sidestep the impact of a strong yen on corporate profits.

Those are similar reasons why Daimler is looking to expand its current presence in the Americas. The parent of Mercedes hopes to launch sales of the compact A-class in the critical US market with the introduction of the next-generation model. But even shifting production to Hungary, where wages are significantly lower than in Germany, won’t resolve the problem with lopsided exchange rates.

While Daimler is expected to still consider other options in the US and Mexico, it is all-but-certain to move in with Nissan, according to sources. That would have several other advantages, providing ready access to the Japanese maker’s existing supplier and distribution network and the inherent economies of scale.

The plant would likely be just one of many that Daimler is looking at, with more capacity likely to go into China as well. CEO Dieter Zetsche is reportedly looking to double Daimler’s 2011 production to roughly 2.7 million by 2020.