Premium Gone? Nissan And Mercedes-Benz To Co-Build Luxury Cars In Mexico

Japan's Nissan Motor Co (7201.T) and Germany's Daimler AG (DAIGn.DE) will build small Infiniti and Mercedes-Benz luxury cars at a Nissan plant in Mexico, two sources confirmed on Tuesday.

The $2-billion Aguascalientes plant, which will open late this year next to an existing Nissan assembly plant, is expected to build the new Infiniti Q30, a compact four-door hatchback that will share engines and some chassis components with the Mercedes-Benz GLA, the sources said.

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Agent009 - 9/5/2013 11:00:24 AM

+1 Boost

Used to be that a "Premium" vehicle was fundamentally different from the main stream, I guess no more.

This like kissing your cousin, while it might look and feel good, something is very wrong.

thejman78 - 9/6/2013 12:32:20 PM

+3 Boost

Is that really true? Were premium cars really ever any different than non-premium cars, at least in terms of the assembly process? There are some examples of hand-built cars in the past, but beyond that, they're all pretty much built the same way. Not sure this is a big deal from that angle.

However, being built in Mexico *is* a big deal to some people (sadly), so I expect that will be the bigger negative for MB.

TheSteve - 9/5/2013 11:13:30 AM

+4 Boost

Just remember that every BMW Z3 ever made was built in the US, and it wasn't known as "The Lesser, American BMW." As long as build quality and defect numbers are consistent with what the customer is used to, the product will sell.

As an example, iPhones are made in China, and yet they are received as premium products.

nguyenvuminh - 9/5/2013 11:49:02 AM

+2 Boost

Agree TheSteve, although 009's point would come into play if quality control isn't being held to the highest standard. I suppose MB isn't going all in given the plant will produce only one MB model and it's not the upper end model.

Agent009 - 9/5/2013 1:18:37 PM

0 Boost

I think QC will be fine. The Germans and Japanese are both good at that.

I just worry about brand dilution, where the Infiniti is given the thumbs up as a lesser price equal to the Mercedes-Benz derivative.

After all, originality is not a Japanese strong point. Especially concerning Infiniti

GermanNut - 9/5/2013 7:19:10 PM

0 Boost

This is due to economies of scale. Mercedes-Benz realizes it can no longer compete with BMW and Audi on a global scale in terms of sales or in terms of profitability unless it finds ways to reduce its operating costs.

Audi benefits tremendously in terms of its cost structure by being a part of the Volkswagen Auto Group and has consistently been more profitable than either BMW or Mercedes-Benz with the latter consistently finishing in last place in the sales and profitability areas over the last 2 years.

MorePower - 9/5/2013 8:47:40 PM

+3 Boost

Mercedes has been building cars in Mexico for years!

Yonder7 - 9/6/2013 5:53:15 AM

+1 Boost

So if BMW and Toyota build any car is not the thing? everyone is looking for profit and AUDI owns the lead due Volkswagen....