Nissan Infiniti says Magna not to build compact car

FRANKFURT Fri Oct 19, 2012 8:53am EDT

FRANKFURT Oct 19 (Reuters) - A compact car which Japanese carmaker Nissan's premium brand Infiniti is planning for 2015 will not be built by Magna Steyr, a unit of Canadian auto parts group Magna International.

Infiniti had been investigating since May whether contract carmaker Magna Steyr's production site in Graz was suitable for the model, which will be based on a Mercedes front-wheel drive chassis.

"Infiniti ended the feasibility study this week and has decided to produce the vehicle inhouse in a European production facility as part of the brand's overall expansion plans," it said on Friday. Magna would not comment.

Infiniti, which has sold about 4,000 cars in western Europe in total, believes volumes for the compact could be 10 times that amount.

The setback for Magna comes after German carmaker BMW said it would likely not renew the contract for Magna Steyr to build the Mini Countryman SUV and Paceman SUV-coupe once their lifecycles have run out.

Most independent contract carmakers in Europe have either been rescued by fresh investors, sold off in parts or filed for insolvency because their customers already have more than enough spare factory space of their own.

Only premium carmakers have struggled with production bottlenecks as they expand their model range, moving downmarket into small car segments traditionally home to volume brands.

In July, Daimler awarded independent Finnish car manufacturer Valmet Automotive a contract to build more than 100,000 Mercedes-Benz A-Class compact cars from 2013-16.

More recently, improved logistical ties to its supplier base in Britain prompted BMW to give VDL NedCar a contract to build Mini cars earlier this month.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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