AFSCME 3357-HOF'S BLOG

Chrysler and Nissan Sitting in a Tree . . .
Small Car to Chrysler / Truck to Nissan

For years, Nissan has battled for space in the market for its Frontier pick-up truck. With strong, newly revised models from Toyota and General Motors, and new models from Ford and Dodge upcoming, Nissan is looking for a graceful exit from building full-sized pick-ups.

Chrysler, LLC has effectively already left the small car field. Going on two years ago, they stopped building the Neon in favor of the mini-suv Dodge Caliber. With high fuel prices, Chrysler desparately needs a small car.

Apparently both companies recognized room for Pareto gains, so they've struck a deal. Nissan will build a small car for Chrysler in Japan. Chrysler will build full-sized pick-up for Nissan in Mexico. Wait a minute, what happens to the UAW workers? They might see a slight net gain in jobs. To make room in its plant in Saltillo, Mexico for the new Nissan truck, Chrysler will shift Ram production to its plants in the Saint Louis North and Warren Michigan plant. Since Chrysler doesn't build any small cars in the US, technically no jobs are going to Japan to build the small car. Nissan does build its pick-ups in the US (in a non-UAW plant), but Nissan previously announced that that manufacturing space would be eventually allocated to a line of new light and medium duty commercial vehicles.

According to Automotive News, the new Chrysler/Dodge car will be built to a Chrysler design on a Nissan platform, and it will be in addition to, not instead of the previously announced Chrysler/Chery FreeTrademobile. The new Nissan truck will debut in 2011.

What's the big picture in all of this? The first thing that comes to my mind is that Chrysler will have its hands full staying alive during the next two years with its current vehicle line-up. The Nissan deal is one that should have been made 2-3 years ago. Right now, Chysler has no stars, and its cash cow ranks are pretty thin. It seems to me that Renault/Nissan CEO, Carlos Ghosn, is setting up Chrysler for a firesale acquisition and may pick up the company's assets for pennies on the dollar, in much the same way that GM acquired Daewoo a few years ago. There remains a lot of room for combined efficiencies. Chrysler is on the verge of fielding a new dual-clutch transmission. Nissan already has an excellent CVT transmission, one that Chrsyler uses in the Dodge Caliber. Chrysler is on the verge of starting volume production of a new V-6 engine that at best will equal the performance of what Nissan has on the street now. With more cars going to 4-cylinder power, Nissan probably has enough V-6 production capactiy to supply Chrysler's needs as well as its own.

All of these international partnerships are interesting. Chrysler already is planning to sell a relabled Nissan Versa in South America. I always thought it would be good for Chinese automaker Rowe to sell it's own version of the Versa, one with a custom brushed leather interior. Naturally, they would call it the Rowe Versa Suede.