Mercedes in pact with Nissan to produce Mercedes-Benz engines in the US

Japanese auto giant Nissan and German luxury car maker Mercedes-Benz on Sunday announced a tie-up to produce engines in the United States starting 2014.

The collaboration marks the first production of Mercedes-Benz engines in the North America Free Trade region.

The two auto firms will jointly produce Mercedes-Benz 4-cylinder gasoline engines at Nissan's power train assembly plant in Decherd, Tennessee.

The Decherd facility will produce engines for Mercedes-Benz and Infiniti models, with 250,000 engines being rolled out annually when the plant is up to full capacity, a statement said.

"This is the newest milestone in our pragmatic collaboration and our most significant project outside of Europe so far," said Renault-Nissan CEO Carlos Ghosn. "Localised 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."

"In the context of our Mercedes-Benz 2020 growth strategy, we have decided that we will expand the production capacities required for this close to the customers,'' Dr. Dieter Zetsche, chairman of the Daimler Board of Management and Head of Mercedes-Benz Cars, said.