Nissan and Benz announce US engine deal

NISSAN is to begin producing Mercedes-Benz four-cylinder petrol engines in the United States from 2014 as part of a growing collaboration between the Renault-Nissan Alliance and Daimler.

The engines will be fitted to models from Infiniti, Nissan’s premium brand that will launch in Australia later this year, and the US-built Mercedes-Benz C-class.

They will be produced at Nissan’s powertrain assembly plant in Decherd, Tennessee, which will have a capacity to build up to 250,000 of the new engines per year.

Renault-Nissan CEO Carlos Ghosn emphasised the importance of the production deal to the Franco-German collaboration, which will see Mercedes-Benz engines produced in the US for the first time.

“This is the newest milestone in our pragmatic collaboration and our most significant project outside of Europe so far,” said Mr Ghosn.

“Localised capacity reduces exposure to foreign exchange rates while rapidly enabling a good business development in North America – a win-win for the Alliance and Daimler.”

Daimler and Renault-Nissan launched their strategic collaboration in April 2010, including a 3.1 per cent equity exchange, and has been gradually expanded.

The collaboration originally included development of a joint Smart/Twingo platform, which will be launched in early 2014, and a new city-van that Mercedes will launch late this year, as well as powertrain sharing (diesel and petrol engines, and automatic transmissions) across a number of models.

More recently, the partnership has been expanded to include an Infiniti premium small car based on the Mercedes B-class from 2014, and electric versions of the Smart and Twingo – with batteries from Daimler and electric motors from Renault-Nissan – also from 2014.

Daimler chairman Dieter Zetsche, who also heads up the Mercedes-Benz car operation, said the Tennessee plant provided a strategic location and logistics links that would ensure a direct supply of engines starting in 2014 for the C-class built at Daimler’s vehicle plant in Tuscaloosa, Alabama.

“In the context of our Mercedes-Benz 2020 growth strategy, we have decided that we will expand the production capacities required for this close to the customers,” said Dr Zetsche.

“Through the strategic extension of our co-operation with Renault-Nissan, we can realise near-market engine production in the NAFTA (North American Free Trade Agreement) region on attractive economic terms and make optimum use of synergies arising from the co-operation.

“Thus we are systematically broadening our manufacturing footprint in this important growth market.”

Nissan established the Decherd powertrain assembly plant in 1997 and now manufactures four, six and eight-cylinder engines for all US-built Nissan and Infiniti models.

The plant – which last year produced more than 580,000 engines – covers an area of 111,000 square metres and also houses crankshaft forging and cylinder block casting operations.