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Chrysler to sell Nissan cars in South America

January 12, 2008|From Bloomberg News

Nissan Motor Co., Japan's third-largest automaker, will supply cars for Chrysler to sell in South America and expand the U.S. carmaker's presence outside its home market.

The agreement calls for Tokyo-based Nissan to provide Mexican-built versions of the Versa compact car starting in 2009, the companies said in a joint statement Friday. Financial terms and the number of vehicles weren't disclosed.

The partnership will help Chrysler boost sales beyond North America, where it now gets 90% of its volume, without investing in a new factory. The deal also keeps Nissan's plant in Aguascalientes working at higher capacity and adds to a growing list of tie-ups for both companies.

"For Chrysler, they are really desperate to get sales outside the U.S.," said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. "This is really a big deal."

The two carmakers said they might explore further cooperation. Jatco, a Nissan-affiliated auto-parts maker, has sold transmissions to Chrysler since 2004.

"This partnership will give Chrysler nearly immediate access to vehicle segments in which we do not currently compete," Chrysler President Tom LaSorda said in the statement.

Nissan's assembly plant in Aguascalientes is the main supplier of Versas to the U.S.

Nissan Chief Executive Carlos Ghosn has said he wants a U.S. partner after General Motors Corp.'s rejection of an alliance 15 months ago. GM rebuffed the idea after three months of study with Nissan and Renault, the French automaker that owns 44% of Nissan.

Chrysler and Nissan haven't discussed equity ties, people familiar with the talks told Bloomberg News last month. Along with the small-car project, the two automakers are seeking to cooperate on large pickup trucks, the people said.

Chrysler's side of the venture will be run by Simon Boag, who was appointed this month to steer alliances with other automakers. He also will direct the partnership Chrysler has with China's Chery Automobile Co. to build cars for export.

Chrysler spokesman Dave Elshoff said the Nissan car agreement wouldn't expand beyond South America and wouldn't affect Chrysler's plans to sell a Chery-built car in Latin America.

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