UPDATE 2-Nissan, Daimler plan joint plant in Mexico -Nikkei

Tue Nov 15, 2011 2:38pm EST

* Plant would make passenger vehicles for North America

* Annual production seen about 200,000 vehicles -Nikkei

* Expected to begin operation first half 2014 -report

* Total investment may reach $1 billion -report

* Nissan, Daimler decline comment

Nov 16 (Reuters) - Nissan Motor Co Ltd and Daimler AG are finalizing plans to jointly assemble passenger vehicles in Mexico for sale mainly in the North American market, the Nikkei business daily said.

The proposed plant will have an annual production capacity of around 200,000 vehicles and is expected to begin operating in the first half of 2014, the paper said.

The total investment in the factory, which will make vehicles for both car brands, may touch an estimated $1 billion, the Nikkei said.

Nissan and Renault formed an alliance with Daimler in April 2010 under which they agreed to jointly develop cars and engines.

A Nissan spokesman in the United States declined to confirm the Nikkei report.

"Nissan continues to grow throughout the world and in order to reach the objectives of our strategic business plan, Nissan Power 88, we continue to study opportunities to install additional capacity in key markets," David Reuter said.

"We have made no announcements concerning adding manufacturing capacity in Mexico and have nothing further to add at this time."

Nissan previously said it was studying opportunities in Mexico after a state government there announced the automaker was considering investing $2 billion in a new plant there.

Japan's Nissan said in September it would build its next Infiniti luxury models outside its home market to escape the burden of a strong yen.

In June, Nissan outlined plans to boost both its global market share and profit margin to 8 percent within six years, a plan dubbed Nissan Power 88.

A Daimler spokeswoman in Germany declined to comment. She said only that Daimler and Nissan were looking into a number of options for cooperation.

Under a proposal, Nissan will build the Mexican plant, with Daimler taking a capital stake in the operating company, the Nikkei said.

Details concerning the joint venture's structure and ownership will be fleshed out later, the paper said.

The joint Mexican plant is expected to initially manufacture Nissan's models that are made at the Japanese's automaker's existing plants and eventually expand to luxury vehicles, the Nikkei said.

Several sites are already being considered for the plant, with a final decision possibly coming before the year's end, the paper said.

Nissan's two plants in Mexico -- in Aguascalientes and Cuernavaca -- will build almost 700,000 subcompact cars and pickup trucks combined in fiscal 2011, mostly for the U.S. and Latin American markets.

Daimler's manufacturing facilities in Mexico focus solely on commercial vehicles such as large trucks and buses, and the joint venture would mark its first passenger car production there.

The German automaker said in July it would invest more than $2 billion in its plant in the U.S. state of Alabama to build more M-Class SUVs. Daimler makes all of its M-, GL- and R-Class SUVs at the plant and ships them globally.

Starting in 2014, the Alabama plant will also make the successor generation of the current C-Class sedans for the North American market. Last month, it said it would invest $350 million to build a new Mercedes-Benz model from 2015.

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