Market Snapshot

Nissan Halts Joint Venture With Chrysler to Produce Fullsize Pickup

Nissan will move forward with plans to supply Chrysler with a Versa-based model for sale in South America this year.

Nissan’s agreement to have a fullsize pickup produced for it by Chrysler has been brought to a halt, as are plans for the automaker to provide Chrysler with a small car, said Nissan spokesman Mitsura Yonekawa last Friday, according to an AP report.

A previously-inked deal to have Nissan supply Chrysler with a Versa-based model for sale in South America beginning this year is still on, according to Yonekawa.

Paul Medina, parts manager for Norco, California-based Frahm Chrysler Jeep Dodge, believes this agreement will be a good thing for Chrysler dealerships who sell aftermarket parts and accessories. "For every new vehicle that comes out, people will want to accessorize it to make it more appealing, whether it's with a custom grille, wheels or tires," he said.

The other parts of the deal are being reviewed due to the company’s cost-cutting efforts, said Yonekawa.

Chrysler Product Development Chief Frank Klegon stated that while Chrysler is still collaborating with Nissan, though, no contract has been signed.

Bill Wolf, SEMA senior director of OEM relations, believes the hold is only temporary, and that in addition to the Chrysler-Nissan alliance, there will be a growing trend of these partnerships. As reported in last week's SEMA e-News, Fiat has agreed to supply Chrysler with compact vehicles in exchange for allowing Fiat to enjoy its dealer distribution network.

“These alliances are simply a factor of economics because of the high cost of developing and manufacturing new models,” said Wolf. “Also, as a result of the current market, a lot of these manufacturers’ facilities are being underused right now, so it makes good economic sense to have these plants working at full capacity.”

In related news, Chrysler Vice Chairman Jim Press urged dealers at the National Automobile Dealers Association convention on January 25 to order more vehicles, according to another AP report

Dealers who attended the conference revealed that Chrysler executives said in a conference call that an additional 15,000 more cars and trucks needed to be ordered so it could qualify for additional government loans. "We've got to get the cash flow coming in so we can get to March 31 as a viable company," Press reportedly said.

The executives stated that 70% of the company’s 3,300 dealers have so far come forward. This includes the dealership where Medina works. "The bottom line is that if dealers don't participate in this call to action, the likelihood of not being in business is a lot greater than them not ordering the vehicles," Medina said.

Chrysler requested an additional $5 billion in government aid earlier this week, in addition to the $4 billion it received in December, as reported by the AP.

Medina is hopeful that the government will be responsive to Chrysler's appeal. "The government aid is what's going to keep the auto industry alive, particularly Chrysler, the dealerships and the multilevel businesses that it will affect," he said. This includes the specialty-equipment industry. "If there is no corporation available, there is no point in supplying the accessories."