Nissan, Chrysler discussing car, truck supply, source says

Reuters TOKYO -- Nissan Motor Co. and Chrysler LLC are in preliminary discussions to supply cars, trucks and engines to each other, a source close to the talks said on Friday.

Both Nissan, Japan's third-biggest automaker, and Chrysler, which was acquired this year by Cerberus Capital Management LP have similar original equipment manufacturing (OEM) deals with other carmakers aimed at saving development costs in an increasingly competitive industry.

Over a year ago, Nissan and its French partner Renault SA broke off talks with General Motors Corp over a comprehensive three-way alliance. While Nissan-Renault Chief Executive Carlos Ghosn has said the alliance could still seek a U.S. partner in future, the discussions with Chrysler are on a smaller, product-by-product level, the source said.

A Nissan spokeswoman declined to comment. No one at Chrysler could immediately be reached.

Nissan has deals with several automakers, including Japan's Mitsubishi Motors Corp. and Suzuki Motor Corp. Suzuki said this week Nissan would build a mid-sized pickup truck based on the Frontier model at its plant in Tennessee to be sold under the Suzuki badge in North America.

Chrysler, whose strengths are in minivans and light trucks, has agreements with South Korea's Hyundai Motor Co., Mitsubishi Motors, Volkswagen AG and China's Chery Automobile Co. and others for the supply and procurement of vehicles.

Carmakers around the world have sought operational tie-ups, especially in recent years as the race to develop advanced environmental technology intensifies.