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Nissan, Chrysler close to deal on small cars

Nissan is nearing an agreement with Chrysler LLC to supply the American company with a version of its Versa subcompact for rebadging and sale in South America.A deal could be announced in the coming few days, and Nissan could start manufacturing the vehicles in the next 12 to 18 months, an industry source familiar with the matter said.Under the plan, Nissan Motor Co. will supply about 20,000 vehicles a year and build the cars at its plant in Mexico. That facility currently produces a 1.8-liter Versa for the United States.

NissanThe car is badged the Tiida in Mexico and elsewhere overseas.The agreement is smaller than some had originally speculated. It will cover only one model, and does not address Nissan's gap in pickup trucks. Chrysler's strength in SUVs and pickups was seen as an area where Nissan might tap that company's expertise.

Cooperation on the Versa would be the second major exchange between the companies. Nissan already supplies Chrysler with continuously variable transmissions.

Nissan has similar OEM arrangements with other automakers. It buys and rebadges commercial vehicles from Mazda and Isuzu and minicars from Mitsubishi and Suzuki. In reverse, it sells commercial vehicles to Isuzu and minivans to Suzuki.In 2008, Nissan will build a mid-sized pickup for Suzuki at Nissan's factory in Smyrna, Tenn.

Under the new ownership of Cerberus Capital Management LP, Chrysler is looking for outside alliances to reduce product development costs. It already has a deal with China's Chery Automobile Co. to produce small cars for world markets, including the United States.

A car for U.S. dealerships is due in 2009.

© Source: seriouswheels
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