Chrysler and Nissan unveil production alliance

By David Bailey and Soyoung Kim

DETROIT (Reuters) - Chrysler LLC CBS.UL and Nissan Motor Co Ltd (7201.T: Quote, Profile, Research, Stock Buzz) unveiled a production alliance on Monday that gives the U.S. automaker the small car it lacks and allows the Japanese company to stay in the competitive full-size U.S. pickup truck market.

Chrysler and Nissan built on a smaller agreement the companies announced in January, but executives from both companies said the new arrangement was purely a production deal and declined to say whether they plan further financial ties.

Under the terms of the deal, Nissan will build a small car for Chrysler using the North American automaker's design in 2010 and Chrysler will build a new full-sized pickup truck for the Japanese automaker using Nissan's plans in 2011, the companies said.

Chrysler's new small car will be built in Japan and sold in North America, Europe and other global markets. The car will be built on an undisclosed new Nissan platform.

The pickup will be built at Chrysler's plant in Saltillo, Mexico, using the light duty Dodge Ram as a base. Chrysler will shift production of pickup trucks from that plant to U.S.-based assembly plants to make room for the Nissan production.

The arrangement follows an announcement in January that Nissan would supply a car based on the Nissan Versa sedan to Chrysler for limited distribution in South America.

Dominique Thormann, senior vice president, administration and finance for Nissan North America, declined to discuss the possibility of deeper ties between the automakers.

"This is an OEM exchange. We don't have a business discussion ongoing currently," Thormann said, adding that Renault, a 44 percent owner of Nissan, was not a party to the agreement.