Roughly one year ago, Mercedes-Benz and Infiniti confirmed plans to build their next-generation compact cars at a new plant located next to an existing Nissan facility in Aguascalientes, Mexico. Today, the two automakers formed a joint venture that will be responsible for production of the new compact cars.  

The joint venture is called COMPAS (Cooperation Manufacturing Plant Aguascalientes) and is 50:50 owned by Daimler and Nissan, the respective parent companies of Mercedes and Infiniti. Around $1 billion is being invested in the facility which is expected to be operational in just two years.

CHECK OUT: Former ‘Top Gear’ Producer Provides Details On Clarkson, Hammond And May’s New Show

The first Infiniti compacts will roll out of the plant in 2017, while the first Mercedes models will roll out in 2018. The cars will be based on the next-generation version of Mercedes’ MFA compact car platform. Close collaboration at every stage of development will ensure that vehicles within the scope of the project clearly differ from each other in terms of product design, driving characteristics, and specifications, the automakers promise.

The new plant will have an initial annual production capacity of more than 230,000 vehicles and will create about 3,600 direct jobs by 2020. Depending on the market development and customer demand, there will be the potential to add additional capacity. Mercedes and Infiniti will also build its compact cars at plants located in Europe and China.

READ: First Details On McLaren’s Next-Generation Super Series Range (P14)

“Together we are combining the manufacturing expertise of Daimler and Nissan in one production plant in Mexico for the production of next-generation premium compact cars,” COMPAS CEO Ryoji Kurosawa said in a statement. “Aguascalientes was selected as the location for this new plant thanks to the state's well-established supplier base and Nissan's track record in highly efficient manufacturing in Mexico for more than three decades.”

This won’t be the first time that Daimler and the Renault Nissan Alliance share production facilities. The latest Smart Forfour and Renault Twingo models share a platform and production hub, and Mercedes and Infiniti already share an engine plant in Tennessee. Furthermore, Mercedes’ planned pickup truck will also share its platform and production facilities with Nissan’s next-generation NP300 (a Navara in certain markets) pickup.