Nissan to build Mercedes engines in Tenn. plant

Nissan Motor Co. and Daimler AG said they have agreed to produce four-cylinder Mercedes-Benz gasoline engines at Nissan's Decherd, Tenn., engine factory from 2014 to be fitted on Mercedes-Benz and Infiniti models.

Nissan and its alliance partner Renault SA have a wide-ranging agreement with Daimler to share vehicle and powertrain technologies. The automakers launched the joint effort in April 2010.

"This is the newest milestone in our pragmatic collaboration and our most significant project outside of Europe so far," Renault-Nissan CEO Carlos Ghosn said in a statement Sunday. "Localized capacity reduces exposure to foreign exchange rates while rapidly enabling a good business development in North America--a win-win for the Alliance and Daimler."

Daimler touted the plan as a way to provide a direct supply of engines for the Mercedes C-class vehicles produced at Daimler's plant in Tuscaloosa, Ala.

Daimler CEO Dieter Zetsche said the plan fits the German automaker's 2020 expansion program.

"We have decided that we will expand the production capacities required for this (expansion) close to the customers," Zetsche said in the statement.

A Nissan-Renault spokeswoman declined comment when asked which Infiniti model would be getting the new Mercedes engine.

Nissan began powertrain assembly in Decherd in 1997. The plant now makes 4-, 6- and 8-cylinder engines for U.S.-produced Nissan and Infiniti vehicles. In 2011, Nissan said the Decherd plant produced more than 580,000 engines.

The Daimler and Renault-Nissan collaboration including an equity exchange that gives the Renault-Nissan Alliance a 3.1 percent stake in Daimler and Daimler a combined 3.1 percent interest in Renault and Nissan, the companies said.

By Automotive News