Chrysler, Nissan end joint ventures

Fiat now plans to supply Chrysler with European designed and engineered small cars to supplement it current range.

In a joint statement Chrysler and Nissan said they had mutually agreed to end three vehicle supply projects announced in 2008.

The statement said that for the past several months, teams from both companies have been studying the viability of the projects in light of significant changes in business conditions since the projects were announced in January and April of 2008.

The statement said that it was decided it was in the best interests of both companies to end the projects.

The decision means Nissan will not supply Chrysler dealers with a small car for global markets starting next year; Nissan will not provide Chrysler with a Nissan Tiida-based sedan to sell in South America; Chrysler will not build the next-generation full-sized Nissan Titan pickup starting in the 2012 model year.

That leaves Nissan with a bigger problem than any facing Chrysler.

Nissan will continue producing Titans at its US plant, through the 2011 model year.

Beyond that, Nissan now must scramble to either find a different manufacturing partner to produce the next Titan or create the truck’s next generation on a very short schedule.

The announcement comes on the heels of press speculation that Chrysler’s new 20 per cent owner, Fiat, soon will begin putting a version of its compact Fiat 500 into production in the US for Chrysler Group dealers.

That would bolster Chrysler’s line-up in a market that has shifted from large vehicles, where Chrysler has excelled in the past, to more fuel-efficient small cars, where the automaker has been weak.

Chrysler’s altered status as a Fiat partner is made clear by the scope of today’s project cancellation, and signals that Chrysler is now taking a larger world-view of its product plans under Fiat leadership.

Nissan was developing the global car to be built in Japan to Chrysler specifications, Nissan officials said earlier this year.

Chrysler was planning to build the Titan on its Ram pickup assembly line in Saltillo, Mexico, using interior and exterior design plans provided by Nissan.

A separate agreement involving the supply of transmissions from Nissan affiliate JATCO to Chrysler remains unchanged. That agreement has been in effect since 2004.