Karl on Cars - Talk Back Tuesday: Chrysler and Nissan, sittin' in a tree

Talk Back Tuesday: Chrysler and Nissan, sittin' in a tree

You may have already heard this, but there's a growing relationship between Chrysler and Nissan. For complete details, check out Michelle Krebs' excellent analysis on AutoObserver.com.

Like many automakers, Nissan and Chrysler are two companies with clearly-defined strengths and weaknesses. What wasn't so obvious to me, until hearing about the budding partnership and reading Michelle's article, is how perfectly these two entities line up and how much stronger they could be as a single unit. Recent history suggests that mergers on this scale are never as simple as they appear at first glance, and the last thing either automaker needs is another failed coupling.

But bottom line -- Cerberus Capital Management is a "show me the money" group of guys, and Carlos Ghosn has wanted a U.S. paring for awhile. It doesn't take a crystal ball to see where this might go, though for now both companies are merely talking about model-sharing plans. How far will these plans go? Let take a look at the obvious ones (all stolen from Michelle's article):

Trucks, Minivans and SUVs: Newsflash! These aren't selling like they used to, and Nissan has converted two former plants from large vehicle to commercial vehicle use. At the same time, Chrysler continues to suffer an overcapacity problem. This one is too logical to ignore, but will Nissan buyers want a re-badged Ram or Durango?

Small Cars: I haven't been a fan of Chrysler's economy car offering since the original Neon died. The second-generation Neon was never competitive (I remember when it launched in 2000 with a three-speed automatic! WTF???), and let's not even talk about the Caliber. The Versa ain't exactly a Mazda 3 slayer, but it would be the best Chrysler small car in nearly a decade.

Midsize Sedans: Altima, Avenger, Sebring. Which one of these is not like the other? Here's a hint -- only one was largely responsible giving its parent company greater sales in 2007 than in 2006. Chrysler needs a decent mid-size family sedan -- bad -- and the Altima is one of the best cars in this category. 'Nuff said.

These are some clear synergies, suggesting many more "model sharing" activities could occur. How far will this go, and how close could the companies get? Is another "merger of equals" a good idea here? What say you?

Posted by Karl Apr 22, 2008 6:00 am

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Categories: Automotive News | Talk Back Tuesday | Domestic Manufacturers Problems/Challenges

Comments

rick8365 - Apr 22, 2008 6:39 am (#3 Total: 22)

I guess I can see it.....and I guess I'm alright with most of the idea. I am not happy with the next gen Titan being a rebadged Ram though - at all. The current Titan is a hell of a first attempt at a full size truck, it's way beyond what T100 or first gen Tundra were and I think it even competes well with the current Tundra. Give the Titan one more (1st) revision and it will easily be top or amongst the top dogs in the category. Full size trucks maybe suffering from slow sales but I can't imagine a day where they don't exist anymore - so why not build on the existing expensive foundation that has been already been laid?

roar02ram - Apr 22, 2008 6:58 am (#4 Total: 22)

The two companies could get incredibly cozy - rebadged vehicles, shared powetrains, etc. And I agree that Chrysler would benefit tremendously from such a pairing given that Nissan's technology is pretty solid across the board. But I think that such a pairing wouldn't really provide Nissan with any substantive benefits and in fact could jeopardize the brand. Think about it: minivans might be a slumping business, but GM and Ford prove that it's a market that's "abandonable" provided that you give consumers a 3-row peoplemover in some form. So ixnay sharing the Caravan as a benefit for Nissan. Arguably, Nissan & Toyota had little business getting into the full-size pickup wars in the first place; if they did, they were better off doing 7/8ths FS pickups like the original Tundra than they were going toe-to-toe with the domestics. Nissan would be wise to exit that market completely. The rest of the market Nissan has covered pretty well and Chrysler has no technology that Nissan doesn't already have (in better form).

Bottom line: Nissan has a lot to lose and a lot to give, but isn't in a position to receive much from ailing Chrysler. A pairing of equals? Not so much.

dougtheeng - Apr 22, 2008 7:25 am (#5 Total: 22)

Niagara, Ontario, Canada

"Both are lacking but at least the caliber has some style"

Neither have style.

firstwagon - Apr 22, 2008 7:34 am (#6 Total: 22)

I agree with 1487, I think the Caliber has style. It's aslo selling much better then the Versa (at least in Canada) dispite it's short comings.

Rather the re-badging a Versa, why not put a Nissan drivetrain in the Caliber? (and have a 3rd party redo the interior) .

ddastardly - Apr 22, 2008 8:01 am (#7 Total: 22)

"Both are lacking but at least the caliber has some style"

The Caliber, Avenger, Patriot, Compass and Sebring were obviously styled on bring your kids to work day....unbelievably hideous cars inside and out, I really resent their presence on my planet.

ahightower - Apr 22, 2008 8:35 am (#8 Total: 22)

Texas

I don't see why Nissan feels the need to be all things to all people. Honda does just fine without a big honkin' truck. Toyota finally got in that game and could not have had worse timing. Let it go, Nissan. Improve the Quest, and keep the bitchin' Infnitis coming. Maybe a new truly small pickup like we were discussing the other day.

chevy598 - Apr 22, 2008 8:41 am (#9 Total: 22)

Nissan is the one that is going to get the most out of this deal. If they get a Dodge truck with a Nissan badge then Nissan won’t have to get out of the truck business. The Titan faces extinction when the new fuel rules take effect. It is going to be hard for Nissan to justify spending near a billion dollars on technology for a truck that sells low volumes. At 70k in yearly sales of the Titan, there is no way Nissan’s bean counters are going to approve building a v6, diesel, and hybrid versions of that truck.

iskch - Apr 22, 2008 9:00 am (#10 Total: 22)

I think Nissan is the most to win from this deal. Nissan didn't say nothing about stopping the update of the Titan and as far as I know they are doing it. Now, what Nissan may get from Chrysler/Dodge on the pickup trucks is the 3/4" to 1" ton with a slap of a badge on the dodge truck nose like Sterling.

The other part too is that Nissan may expand the market of the Titan to Mexico. Don't forget the Renault connection. So many variables to play with.

estreka - Apr 22, 2008 9:33 am (#11 Total: 22)

subarctic north - Great Falls, MT

I don't think Ghosn and Nardelli will get along well enough for this to be feasible. You're talking about 2 very aggressive personalities (albeit we haven't seen Nardelli in action yet).

I bet the folks at Mitsubishi are clenching their teeth at this potential partnership.

editor_karl - Apr 22, 2008 11:32 am (#12 Total: 22)

L.A. CA United States of America

"One thing that doesn't work well here, is that Nissan already builds most of their US-sold vehicles here. So they stand little to gain by sharing a plant NUMMI style, and probably have no interest in purchasing any dead production capacity from Chrysler."

Actually, that's the big benefit for Nissan, as the company has shifted both the Texas and Missippi plants to primarily commercial use, so they do need plant capacity and they likely won't keep building their own versions of the Titan and Quest. By using Chrysler's foundations in truck and minivan development/assembly they save on both R&D and plant capacity.

roar02ram - Apr 22, 2008 11:57 am (#13 Total: 22)

"By using Chrysler's foundations in truck and minivan development/assembly they save on both R&D and plant capacity."

But do you really think that it's worth all of that for 70,000 units per year (trucks)? As for the minivan - VW is already selling a version of the Caravan. Do you think that Dodge (and the market) could support a Nissan version, too?

I don't think that amount of truck sales is enough to justify even badge-engineering, particularly when their already excellent product didn't take off. As for the minivan - Nissan has already expanded a platform for a minivan. Seems to me that they could do it again with a large 3-row crossover to slot above the Murano & effectively replace the Armada AND the Quest.

rkoe36 - Apr 22, 2008 12:27 pm (#14 Total: 22)

anybody down with a FM-based Dart or something like that?

blackadder5639 - Apr 22, 2008 3:56 pm (#15 Total: 22)

"......as the company has shifted both the Texas and Missippi plants to primarily commercial use,......"

Karl, do Nissan sell any commercial vehicles in the US? I haven't seen any. I know they do have commercial vehicles because they are fairly common in Africa, but haven't seen any here.....

altimadude00 - Apr 22, 2008 4:34 pm (#16 Total: 22)

1487-- "The Versa is one of the dullest vehicles on the market with an interior that is just as cheap as the Dodge's."

The exterior of the Versa might be dull, I grant that. However, the interior of the Versa, especially in SL trim, is leaps and bounds better than a Caliber. You get acres of hard plastic panels in the Caliber, that the base Versa shares, but the SL gets soft-touch materials. You can get pretty much what you want in the way of electronics for both of them. Caliber has some neat-o gizmos like ChillZone (that works off the air conditioner), and flip down speakers, and a flashlight (ooh). Versa gives you rear legroom that the Caliber does not have. The Versa also gives you more comfortable seats.

You must be basing your opinion on a loaded Caliber with a base Versa.

vvk - Apr 22, 2008 7:32 pm (#17 Total: 22)

I liked Versa far better than I liked Mazda3. Mazda3 I test drove felt cheap, had weak sound insulation, poor ride and terrible brakes. Versa had a slightly european feel to it -- solid, smooth ride, quiet interior and pretty good handling. Plus, Mazda3 sedan trunk is extremely tiny compared to the excellent trunk of Versa sedan.

firstwagon - Apr 22, 2008 7:38 pm (#18 Total: 22)

Mazda3 and Versa come as sedans???

1487 - Apr 23, 2008 5:22 am (#19 Total: 22)

Philadelphia PA United States of America

"The Caliber, Avenger, Patriot, Compass and Sebring were obviously styled on bring your kids to work day....unbelievably hideous cars inside and out, I really resent their presence on my planet."

yes, but the Versa is absolutely beautiful. Why cant Dodge take more styling cues from Nissan?

"However, the interior of the Versa, especially in SL trim, is leaps and bounds better than a Caliber. "

No its not. The Versa interior looks like its from the 90s and is full of hard plastics. It's no better. Both vehicles are cheap and have interiors that are to be expected in cheap cars. I know the Caliber is the whipping boy of media types and Big 3 bashers nationwide but as I said it's outselling the Versa and several other highly acclaimed vehicles (Fit, Lancer, etc.) so once again the people like something that journalists do not. Its a common occurence.

Also, someone said Nissan has a clear lead in technology over Chrysler but that isnt true. Chrysler lacks a modern VVt V6 engine but they have already announced one is coming out within a year or two. That engine will give them parity with Nissan's VQ. Chrysler has a 6 speed auto for FWD applications which is equivalent to Nissan's CVT. Chrysler's updated HEMI is more powerful than the 5.6L DOHC V8 used in Nissan's trucks. Chrsyler has tons of minivan innovations that Nissan lacks and has myGig which Nissan lacks. Chrysler needs better designs (Nissan is hardly an example they need to follow) and a better V6 engine with more power and fuel efficiency.

roar02ram - Apr 23, 2008 5:46 am (#20 Total: 22)

"Chrysler lacks a modern VVt V6 engine but they have already announced one is coming out within a year or two. That engine will give them parity with Nissan's VQ. "

Right, and gas prices aright now are kind of high. Ummm, this is HUGE! Chrysler's V-6 engines are the WORST in the industry - GM has a modern engine, Ford just introduced one, and every other automaker has had one for ions. Chrysler's the last.

Funny you should mention MyGig...it doesn't seem like Chrysler's gotten the lift off of that product that Ford's gotten off of Sync. Go figure. And for what it's worth, Nissan Navigation & Infotainment is among the best in the industry, particularly among MAINSTREAM automakers. The onyl point I'll fully concede - the Hemi. Then again, who cares in this market?

bepperb - Apr 23, 2008 7:26 am (#21 Total: 22)

"That engine will give them parity with Nissan's VQ. "

Ha! I'll be watching for Ward's 10 best. The maker of the worlds worst V6's will be making the worlds best in a few months. It's more likely Honda will have a 5.7L V8 making 500 hp and 32mpg... early 2010, in the Civic.

1487 - Apr 23, 2008 10:29 am (#22 Total: 22)

Philadelphia PA United States of America

"Right, and gas prices aright now are kind of high. Ummm, this is HUGE! Chrysler's V-6 engines are the WORST in the industry - GM has a modern engine, Ford just introduced one, and every other automaker has had one for ions. Chrysler's the last."

That was my point. The lack of a modern V6 is a major problem for Chrysler.

"Ha! I'll be watching for Ward's 10 best. The maker of the worlds worst V6's will be making the worlds best in a few months. It's more likely Honda will have a 5.7L V8 making 500 hp and 32mpg... early 2010, in the Civic."

Its not rocket science to build a V6 with VVt and 250-270hp these days. Chrysler must know something about engines since their old school HEMI makes more power than Nissan's V8 which is only .1 L smaller. The HEMI in the new ram also matches the output of Toyota's 5.7L V8 while making slightly more torque.

I would say the worst V6 on the Market would be the one in the Optima, not Chrysler's 3.5L.

The bottom line is that Chrysler is unlikely to be getting into this deal in order to get access to the VQ. Hopefully their new engine will be more refined and efficient than the VQ.

"GM has a modern engine, Ford just introduced one, and every other automaker has had one for ions. Chrysler's the last. "

Ions? Really? Toyota just launched their modern V6 in the RX350 a few years back. That engine didnt find its way into the Camry until 2006. Prior to that the mainstream Toyota V6 made 194hp. When Chrysler introduced the 3.5L in the 300M back in 1998 it was actually one of the most powerful V6s on the market. At that time the Accord was making 200hp and the Maxima was making 195hp. The Altima didnt even have a V6 back then. Chrysler's problem is they didnt continue to update the V6 or have a replacement in the wings at the right time.