updated 4/14/2008 7:27:35 PM ET 2008-04-14T23:27:35

Nissan Motor Co. said Monday it will make a new small car designed by Chrysler LLC and Chrysler will make a full-size pickup truck designed by Nissan.

The agreement is part of a growing relationship between Chrysler and the No. 3 Japanese automaker as they attempt to adapt to markets buffeted by the economic slowdown and rising gas prices.

Both products will be sold in North America, and the new Chrysler small car will also be sold in Europe and other global markets starting in 2010. No financial details were disclosed.

The new Chrysler small car will be made at Nissan’s Oppama plant in Japan. Chrysler will make the pickup truck at its plant in Saltillo, Mexico, and it will go on sale in 2011, the companies said.

The Nissan Titan, Nissan’s current full-size pickup, will remain on the market until the new pickup goes on sale, said Dominique Thormann, senior vice president for administration and finance at Nissan North America. The Canton, Miss. plant that makes the Titan will start producing commercial vehicles for Nissan and no jobs will be lost, Thormann said.

To clear room to build the Nissan pickup in Saltillo, Chrysler will shift production of its own pickup trucks from Mexico to U.S.-based pickup factories, the companies said in a statement.

“Forging the right tactical partnerships is critical to the long-term success of Chrysler,” Chrysler President and Vice Chairman Tom LaSorda said in the statement.

Thormann said that the agreement is limited to the two vehicles and there are no ongoing merger discussions, but he did say both companies would continue to consider product-sharing opportunities.

Aaron Bragman, an analyst with the consulting company Global Insight, said the agreement doesn’t necessarily mean Chrysler is headed for a full-fledged alliance with Nissan-Renault, although the two automakers are a good fit for Chrysler. Such deals allow automakers to play to their strengths and share the risk and capital costs of bringing products to market.

“I think this is exactly the kind of thing that Chrysler needs to be doing to guarantee its future,” Bragman said.

In January the two companies announced a deal for Nissan supply versions of its Versa subcompact for Chrysler to sell in undisclosed parts of South America. No specific terms were announced.

Under the new deal, both the Chrysler small car built by Nissan and the pickup truck built by Chrysler will be unique designs.

Thormann said the agreement will allow Nissan to offer more cab and engine configurations than it does now. He wouldn’t say whether Nissan will take advantage of Chrysler’s hybrid technology, which was developed in conjunction with General Motors Corp. and BMW AG. Chrysler plans to bring a hybrid version of its Dodge Ram pickup to market in 2010.

Thormann said U.S. pickup sales have been declining since the Titan was released in 2004, but he said there are still 2 million vehicles sold in the U.S. each year.

“It’s still a very attractive segment to have a product offering in,” he said.

Titan sales fell 9 percent in 2007. In the first quarter of this year, Titan sales plummeted about 40 percent. They were the victim of heated competition — the new Dodge Ram and Ford F-150 will be out later this year — and a slowdown in housing construction.

Chrysler has been desperate for a small car in North America as high fuel prices send consumers away from its trucks and sport utility vehicles to more fuel-efficient models.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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