Friday, January 11, 2008

Nissan to supply Chrysler with car for South America

OKYO, Jan 11 (Reuters) - Nissan Motor Co (7201.T: Quote, Profile, Research), Japan's third-biggest automaker, will supply Chrysler LLC with a fuel-efficient small car for sale in South America, the two companies said in a statement on Friday.

The new car will be based on the Nissan Versa sedan, which has an engine displacement of 1.8 litres, and will be supplied to Chrysler on an original equipment manufacturer (OEM) basis from 2009.

The deal, which had been flagged by media, would help Chrysler bolster its product line-up as rising gasoline prices boost demand for fuel-efficient cars while allowing Nissan to benefit from higher output.

"This kind of tactical partnership allows us to maximize product offerings yet minimize costly investments -- such as new plant infrastructure, tooling and R&D," Chrysler President Tom Lasorda said in a statement.

Nissan and Chrysler, which was acquired this year by Cerberus Capital Management LP [CBS.UL], have been in talks to supply cars, trucks and engines to each other, a source familiar with the matter told Reuters last month.

Both Nissan and Chrysler have similar 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 (RENA.PA: Quote, Profile, Research) broke off talks with General Motors Corp (GM.N: Quote, Profile, Research) 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. (Reporting by Noriyuki Hirata and Nathan Layne; Editing by David Holmes/Rory Channing)

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