Daimler and its alliance partner Renault Nissan have confirmed plans to build next-generation compact cars for their respective Mercedes-Benz and Infiniti brands in Aguascalientes, Mexico, the site of a Nissan plant since 1992. Approximately 1 billion euros ($1.36 billion) will be invested in the site, split 50:50 between the two automakers, and annual capacity will be 300,000 units once fully ramped up.

The benefits of Mexican production are numerous. They include access to good infrastructure, competitive cost structures and lucrative trade agreements with the U.S. The move will also help the automakers hedge against currently fluctuations and aid logistics. This is why rival firms are also looking at Mexican production. Audi has already announced plans to build its next-generation Q5 in Mexico, and BMW is considering doing the same with its 3-Series.

Mercedes currently produces most of its compact cars in Europe, and starting from next year Infiniti will produce its first two compact cars, the Q30 hatch and a QX30 crossover variant, in the U.K. However, the two automakers have been looking for a Mexican production base for their future compact cars for some time.

Infiniti will start producing cars at the Aguascalientes plant in 2017 and Mercedes will start in 2018. The cars they produce will feature a common platform, just as Mercedes’ current compact range and the upcoming Q30 and QX30 models from Infiniti all share Mercedes’ MFA architecture.

Close collaboration at every stage of development, from advanced research and design to production, will ensure that vehicles within the scope of the project clearly differ from each other in terms of product design and specifications, the automakers promise.

Daimler and Renault Nissan first announced their alliance in April 2010 and have already collaborated on 12 major projects. Recently, Nissan’s plant in Decherd, Tennessee started churning out four-cylinder engines for use in the Mercedes C-Class and Infiniti Q50, and later this year the Renault and Smart brands will start selling their respective next-generation Twingo and Fortwo/Forfour city cars, which also share a platform.


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