The Low Post News

Two Automakers Sharing Same Mexican Plant

Renault-Nissan and Daimler expanded their alliance in auto making significantly on Friday when they announced they jointly were building a plant for production in Mexico to build new compact Infiniti and Mercedes cars.

The two companies said $1.4 billion would be invested in the new plant to be located in Aguascalientes, Mexico, which is approximately 300 miles to the north of Mexico City. Nissan has a major production plant already in the area.

The vehicles produced at this 50/50 joint venture will have different brand names as well as look differently from each other, they will share a number of components, said the CEO of each during a Friday news conference.

The two companies will also be sharing some costs for the developing of the new autos. However, the two said they were not worried about the cannibalizing of the sales of one another.

Very little if any overlap exists between buyers of Daimler’s Mercedes and the Renault-Nissan Infiniti cars, said CEO Carlos Ghosn of Renault-Nissan Alliance.

Daimler Chairman Dieter Zetsche said if sales risks were involved there would be red flags raised by both sides and none of this would be happening.

Mercedes and Renault-Nissan have collaborated for four years. Renault-Nissan itself is a longstanding alliance between the French and Japanese.

Amongst other things the two produce are four-cylinder engines at a Decherd, Tennessee factory. The cost was also shared by the two for developing major components for their flagship next generation small cars, the Daimler Smart and Renault Twingo, which both are scheduled to be on sale in 2014.

The partnership was part of a trend for auto companies and with some cases, competitor’s share the huge costs of developing as well as producing new vehicles while keeping brand identities separate.

Zetsche and Ghosn often have bragged that the alliance is one of the most successful examples of alliances between auto companies.

The Mexico plant will not reach capacity until 2012 at which time it will have a capacity of 300,000 vehicles annually and will employ over 5,700 people.

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