Chrysler and Nissan Motor have followed up their January announcement of supply of a new car based on Nissan's Versa sedan for Chrysler to sell in South America from 2009 with further developments that will see Nissan make a new small car in Japan for Chrysler while the Detroit automaker returns the favour with a full-size Mexico-made pickup.

The "fuel-efficient" new segment small car for Chrysler will be sold in North America, Europe and other global markets in 2010, and manufactured at Nissan's Oppama plant in Japan.

Based on a Nissan design, the truck will be made at Chrysler's Saltillo assembly plant. To accommodate this product, Chrysler will shift volume from Mexico to its US-based pickup assembly plants. Sales in North America start in 2011.

Some US reports said the Nissan truck would be based on Chrysler's full-size Ram with major exterior and interior reworks by Nissan. Chrysler already builds a version of its smaller Dakota truck for Mitsubishi to sell in North America as the Raider.

Nissan last week announced it would build three new sub-eight-ton LCV models in the US from mid-2010 at the Canton, Mississippi plant which makes its current full-size pickup, an in-house design called the Titan.

That and its Infiniti QX56 luxury SUV spin-off are due for redesign around 2010/11 so the Chrysler-built truck is a Titan replacement. The QX56 is expected to move upmarket into Range Rover territory with the replacement built in Japan.

Dominique Thormann, senior vice president, administration and finance for Nissan North America, told Reuters last night that production of the current Titan will continue for another 32 months at the plant. He added that the truck produced by Chrysler will be a full-size equivalent to the Titan, although a name has not been selected.

Nissan expects employment at Canton to be unaffected, with Titan production phased out as light commercial vehicles are gradually rolled out, he told the news agency.

In a statement, Chrysler said this latest OEM supply agreement extends a long standing product exchange relationship between the two automakers, begun when Nissan affiliate Jatco started supplying transmissions in 2004.

"Forging the right tactical partnerships is critical to the long-term success of Chrysler," said Chrysler president and vice chairman Tom LaSorda.

Thormann, however, declined to discuss the possibility of deeper ties between the automakers with Reuters.

"This is an OEM exchange. We don't have a business discussion ongoing currently," Thormann said, adding that Renault, a 44% owner of Nissan, was not a party to the agreement.

The news agency noted that Chrysler has been negotiating a deal for China's Chery Automobile to build a global small car expected to be based on the Hornet concept that it has already displayed.

The automaker told Reuters Chery remains firmly in its plans, although it would be some time before Chery vehicles would be ready for export to North America and Western Europe.

The product tie-up also brings Nissan closer to its goal of having a full-fledged North American partner, Reuters added.

Nissan was rebuffed in an earlier attempt to clinch a global tie-up with GM under a proposal that had been brokered by dissident GM shareholder Kirk Kerkorian, the news agency noted, adding that the Japanese automaker has been marginalised in the increasingly competitive market for full-size pickup trucks, a segment that has been hit hard by the downturn in the US construction industry.

Ford, GM and Chrysler still dominate the full-size truck market although Toyota is making inroads with its redesigned Tundra.