Mercedes-Benz negotiates with Infiniti over a joint venture

Mercedes-Benz announced that it is currently negotiating with Infiniti over jointly developing of a second shared vehicle platform. The platform is planned to be used for building larger Sedans and SUVs.

There is already another agreement between the two premium brands, which work together on a smaller platform for compact cars. The Chief Executive of Infiniti – Johan de Nysschen – said that that both Mercedes and Infiniti are expected to use the potential new platform for spinning off their own individual models. He told the Financial Times: “We are discussing right now and examining the potential of extending that into a second vehicle project. We are looking at a versatile platform for larger vehicles, both rear-wheel drive and four-wheel drive that could form the basis for Sedans and SUVs.”

A global alliance about shared designs, products, engines and factories is formed between Daimler AG, which is the owner of Mercedes-Benz, and Nissan Motor Co. Ltd., which owns Infiniti.

Almost since its beginning, Infiniti has been focused on the market in the U.S. developing as an entry-level luxury brand. Over the last few years Nissan has given the brand executive independence and heavy financial support in order to make it one of the leading brand in the tempting global premium market. The Chief Executive Officer of Nissan, who is also a former Audi Executive, has been working hard in order to create and cultivate the brands relationship with Daimler AG, because he sees this relationship as a way to develop world class products faster and less expensively. Mr. de Nysschen has set a global sales target of 500,000 cars by 2020. This is more than three times the last years sales, and also a double-digit operating profit margin.

When it comes to the global car industry, joint development and technology sharing are becoming more popular. One of the main reasons supporting this trend is the fact that most car manufacturers are trying to spread the costs of designing and producing new products and platforms, which are usually pretty high.

In an interview at the Detroit motor show, Johan de Nysschen also said: “If both companies want to develop a car, theres a certain cost of entry associated with that. If we split the cost 50-50, weve just got ourselves a 50% discount. We can then leverage that. Joint purchasing of components that are common and… even joint manufacturing.”

According to Bloomberg, the current share price of Daimler AG is 2.05% up, and its one-year return rate is 53.32% up. The current share price of Nissan Motor Co. Ltd. is 0.43% up, and its one-year return rate is 9.72% up.