Chrysler, Nissan Strategic Alliance In Jeopardy
Article by Matthew C. Keegan
Early last year when it became apparent that Chrysler LLC would have a tough time making a go of it without the help of another automaker, rumors started to surface that Chrysler would join the Renault-Nissan alliance as the third leg in a global car building stool. Carlos Ghosn, the CEO of both Nissan and Renault immediately squashed those rumors, but it did turn out that his Nissan operation was interested in forging specific product alliances with Chrysler.
Short of an outright merger or even a partial purchase of Chrysler, Nissan and Chrysler did make several agreements including where Nissan would produce a small car for Chrysler while Chrysler would supply the truck platform for the next generation Nissan Titan pickup truck. Now we learn that both projects are on hold as each automaker attempts to figure out where they are at financially going forward.
This change in strategy makes sense as Chrysler is due to submit a report on February 17th to the federal government outlining how it plans to return to profitability. The report is mandatory, coming about when Chrysler accepted billions of dollars in taxpayer funds late last year in a bid to stay in business. Chrysler must now explain in detailed fashion to Congress how they will survive beyond the next few months, the period when the company is likely to see its worst losses.
For Nissan, the Japanese automaker has also been hit quite hard by the recent global downturn. The automaker has slashed production, put new plants on hold and is laying off or cutting back the hours for a number of workers. They also announced that its big sport/utility models and minivan will be canceled, suggesting that the Nissan Titan truck could be vulnerable too. If that were the case, than Nissan would simply cancel its platform sharing agreement and likely drop the Titan from its line up within the next year or two.
The two automakers have also discussed, but not finalized an agreement where Nissan would build Chrysler’s next generation midsize car at one of its Tennessee factories. That move may be on hold too, but for other reasons: Chrysler is working with Fiat to supply a number of small cars for its three brands, suggesting that a slightly larger Fiat could fulfill that need.
Clearly, these are difficult times for the global auto industry, unlike any time we’ve seen in more than a generation. Nissan and Chrysler have a lot at stake, suggesting that whatever agreements are made will always be conditional on the fortunes of one or more company.
About the Author
Matthew C. Keegan is a freelance writer who resides in North Carolina. Matt is a contributing writer for Andy’s Auto Sport an aftermarket supplier of quality parts including Nissan hardbody wheels and Nissan hardbody rims.
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