Chrysler, Nissan: How about sharing?

Exchanging vehicles, technology could build powerful team

Lindsay Chappell
and Bradford Wernle
Automotive News
December 24, 2007 - 12:01 am ET

NASHVILLE — Chrysler and Nissan are talking, and it's easy to see why. Just consider the prospects for a product-, platform- and technology-sharing bonanza.

Chrysler needs small cars, and Nissan craves more truck market share. Each could help the other big-time if the two companies decide to cooperate.

What's more, each has ways to supply the other with crucial fuel-saving technology.

ENLARGE Chrysler is a big player in big trucks with its Dodge Ram.

Terrible record

Chrysler and Nissan seem like natural partners, a potentially awesome twosome — except that Chrysler has a terrible track record when it comes to working with other automakers. Its tie-up with Daimler-Benz ended in failure this year, and two separate alliances with Mitsubishi never came close to realizing their potential.

Nissan, on the other hand, is pretty good at it.

The two companies are discussing ideas for working together and could reveal plans as early as mid-January, according to an industry source familiar with the talks.

"Every manufacturer has strengths and weaknesses," said the source. "This allows you to get into new segments at a much lower cost than you could by doing it on your own."

So far, Chrysler CEO Bob Nardelli and Nissan boss Carlos Ghosn haven't met up. But the motivations for both sides are obvious: one-ton pickups, commercial vans, heavy-duty vehicle components for Nissan; small, fuel-efficient cars for Chrysler. Alternative-fuel technology for both.

Still, Chrysler's history of cooperation is dismal.

"Chrysler has been in bed with about everybody, and it has not had any healthy offspring," says Christoph Stuermer, an analyst at Global Insight in Frankfurt.

ENLARGE Nissan is a master of small cars, including the Versa.

A golden model

By contrast, the partnership of Renault and Nissan has worked like a charm. While still separate companies, the two share vehicle architecture and supply chains, and pick and choose from each other's technology.

All of those were equity tie-ups, though, and that's not what Chrysler and Nissan have in mind, sources say.

The two companies could fill big gaps in each other's lineups.

-- From Chrysler, Nissan could solve its hybrid needs quickly and cheaply. Chrysler is one third of the trio that developed both rear- and front-wheel-drive Two Mode hybrid transmissions, along with General Motors and BMW. GM, which produces the transmissions, has been anxious to sell the technology to other automakers and could do so through Chrysler.

In around 2010, Cummins Inc. is scheduled to deliver to Chrysler two all-new diesel engines, a V-6 and a V-8. The V-6 likely will power Chrysler's light-duty pickups and SUVs, while the V-8 goes into the heavy-duty Ram pickup. These engines could power Nissan's light trucks. And there's a bonus: Like the Two Mode transmissions, the price likely will be attractive because they will be built in the dollar zone.

From Nissan, Chrysler would benefit enormously from Renault's European diesel passenger car engines. Nissan also is developing proprietary hybrid drives, as well as electric cars that Ghosn says will show up in America by 2012.

-- Nissan is struggling to gain acceptance of its Titan full-sized pickup. Now in its second generation, the truck will end 2007 selling about 65,000 units — far short of its original annual target and way below the 350,000 Rams that Dodge will sell this year.

Nissan has not ventured into the big-hauling, one-ton territory owned by GM, Ford and Chrysler. Nissan has studied the workhorse truck segment but has slow-walked the idea as the U.S. economy softened. An entry in the segment could cost Nissan $1 billion.

-- Ghosn wants to put Nissan in the global commercial van market — something its U.S. dealers have urged the company to pursue. Chrysler has long been a player in that segment, says Saul Rosen, owner of Rosen Nissan in Milwaukee and incoming chairman of Nissan's national dealer advisory board.

-- Nissan has failed to crack the U.S. minivan market in a big way. Chrysler has dominated that segment for a quarter century.

-- Nissan's U.S. car sales are closing in on Chrysler's, due partly to success of small Nissan cars such as the Versa and Sentra. Nissan is pursuing even smaller entries. Globally, Nissan and Renault have had success selling an inexpensive small car called the Logan, which may be sold in Mexico. This year, Nissan and Renault signed a deal with Mahindra & Mahindra of India to develop an even cheaper car.

Chrysler already has a deal with China's Chery Automobile Co. to produce small cars for world markets, including the United States. A car for U.S. dealerships is due in 2009. But a link with Nissan could provide another source of small cars.

Dave Cole, director for the Center for Automotive Research in Ann Arbor, Mich., says an alliance with Renault-Nissan shouldn't affect Chrysler's relationship with Chery.

"No matter who is in the game, there's a potential role for Chery."

But Cole says Chrysler also needs "a very significant global player."

"They have to develop a relationship with a strategic partner that will keep them in the game," he says. "There are players that want to play badly and that need them, one of which is Renault-Nissan."