US/JAPAN: Nissan-Chrysler OEM deal off
Nissan and Chrysler on Thursday announced jointly they had ended a mutual OEM vehicle supply deal announced last year that would have seen Nissan take Chrysler-built trucks in exchange for re-branded cars.
"For the past several months, teams from both companies have been studying the viability of the projects in light of significant changes in business conditions since the projects were announced in January and April of 2008," the two automakers said in a statement.
"Today, it was decided it was in the best interests of both companies to end the projects."
Had the deal proceeded, Nissan would have supplied Chrysler with a compact sedan based on its Versa/Tiida model line for the South American market, beginning this year, and a small vehicle for global markets starting in 2010. Chrysler in return would have built a full-size pickup for Nissan to replace its current US-built Titan line from 2011.
A separate agreement involving the supply of transmissions from Nissan affiliate JATCO to Chrysler, in effect since 2004, is unchanged, the automakers said.
Under previous management headed by then-president and vice chairman Jim Press, and now-departed CEO, Robert Nardelli, Chrysler explored several OEM manufacture alliances with other automakers.
Before its recent Chapter 11 reorganisation and alliance with Fiat, it got as far as an initial agreement to rebadge a Kia vehicle as a Dodge for US sale, a Chrysler official said last May during a bankruptcy court hearing. The Korean automaker reportedly backed out of the deal "late in the game" because of manufacturing issues.
The US automaker was also said to have considered a joint deal with GAZ and Magna International to build a vehicle in Russia, using spare capacity at a GAZ assembly plant, and larger potential alliances with General Motors and Fiat, as well as Nissan, in the previous year.
The Nissan deal was explored in a 90-day study under a project named 'Go Global' and the companies had a face-to-face meeting on the study in Toyko in February 2008.
As well as considering the now-canned possibility of Chrysler manufacturing a truck for Nissan North America and Nissan manufacturing small subcompact cars for Chrysler, the study also looked at potential cost savings, including purchasing, procurement and manufacturing.
The study wrapped up in May 2008, but the value of the deal had changed "for the most part in the wrong way" as financial conditions weakened, the official said in court.
The companies also explored additional cost synergies, such as savings through product and powertrain initiatives, but the discussions didn't result in a deal.
In August 2008, Chrysler initiated discussions with GM, calling the talks 'Project America' and there was a series of negotiations and a deeper information exchange in October. But due diligence stopped after the financial crisis "hit in full force" around that time, the official added.
Last December, Chrysler said it had ended a deal, announced in July 2007, which would have resulted in Chery manufacturing small and subcompact cars - likely reviving the Dodge Hornet nameplate - for Chrysler in China. Initial sales were planned for Latin America in 2008-2009 with North American and European sales starting later. But the venture encountered delays over quality issues.
Fiat now plans to supply small car technology to Chrysler in return for a 20% equity stake.
A recent alliance between Chrysler and Mitsubishi's US unit, under which the Dodge Dakota medium size pickup was rebadged for the Japanese automaker as the Raider, will end with the 2010 model year.
Nissan's US unit supplies a rebadged version of its Frontier mid-size pickup truck to Suzuki which sells its as the Equator.
Overseas, Nissan has several OEM deals under which it both supplies and buys-in vehicles; the latest is the Pixo city car which is based on Suzuki's Alto. Such deals are common in the minicar sector in Japan.