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Mexico factory to build Mercedes and Infiniti cars
Automakers » Daimler and Renault-Nissan to invest $1.4 billion in plant in Aguascalientes.
First Published Jun 27 2014 03:50 pm • Last Updated Jun 27 2014 03:50 pm

Frankfurt — Daimler and Renault-Nissan significantly expanded their automaking alliance Friday, saying they would jointly build a production facility in Mexico to produce a new generation of compact Mercedes and Infiniti cars.

The companies said they would invest about $1.4 billion in a plant in Aguascalientes, Mexico, about 300 miles north of Mexico City, where Nissan already has a major production operation.

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While the vehicles produced at the 50-50 joint venture will carry different brand names and look different from one another, they will share many components, the companies’ chief executives said in a news conference Friday.

The companies will also share some of the costs of developing the new vehicles. But they said they were not worried about cannibalizing each other’s sales. There is virtually no overlap between buyers of Mercedes cars from Daimler and Infiniti cars from Renault-Nissan, said Carlos Ghosn, chief executive of the Renault-Nissan Alliance.

"We are not addressing the same customer base," he said.

Dieter Zetsche, chairman of Daimler, added, "If there was a risk, our sales organizations on both sides would raise their hands, and none of that has happened."

Mercedes has cooperated for four years with Renault-Nissan, itself a longstanding French-Japanese alliance. Among other things, they produce four-cylinder engines together at a factory in Decherd, Tennessee. They also shared the cost of developing major components for the next generation of their flagship small cars, the Renault Twingo and Daimler Smart, which are scheduled to go on sale this year.

The partnership is part of a trend for car companies and, in some cases, competitors to share the enormous costs of developing and producing new models while maintaining separate brand identities. Zetsche and Ghosn have often bragged that their alliance is one of the more successful examples.

At the same time, the two executives said they had no plans to merge. In Stuttgart, Germany, home of Daimler, memories are still fresh of the company’s disastrous acquisition in 1998 of Chrysler, which lasted a decade before the companies split up.

By the time the Mexico plant reaches full capacity in 2021, it will be able to produce 300,000 vehicles a year and will employ 5,700 people, Daimler and Renault-Nissan said. The factory will begin producing Infinitis in 2017 and Mercedes cars the following year. While the companies will initially maintain separate production lines, eventually, both lines will be able to produce either brand, making it easier for the companies to respond to fluctuations in demand.

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Zetsche said it was too early to give details about the new vehicles, except that they would be aimed at the fast-growing market for premium-brand compact vehicles.

The companies looked at other sites in North America before choosing Aguascalientes, Zetsche said, but he declined to say where.

Copyright 2014 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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