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Chrysler LLC is officially exploring a manufacturing partnership with Nissan to produce the replacement for its Dodge Avenger and Chrysler Sebring midsize cars, known internally at Chrysler as Project D.

"The front-end [research and product design] of the project is done," Chrysler product development chief Frank Klegon said. "Now we're in the process of making the decisions for execution, such as where the platform comes from. We're talking to possible partners. Nissan is one."

The companies already have one joint manufacturing agreement in place, in which Nissan will produce a small car, based on its Versa compact, for Chrysler in South America, and Chrysler will supply Nissan with a full-size pickup, based on the new Dodge Ram 1500, for sale in the U.S.

The platform candidate for Project D would likely be Nissan's midsize Altima sedan, one of the best-selling cars in the country.

Chrysler urgently needs a replacement for the Avenger and Sebring. Avenger sales fell 75% in 2007 — to 2,050 units from 8,146 in 2007 — and Sebring sales were off 61% — down to 3,572 cars from 9,274 a year earlier.

A final decision hasn't been made, but Chrysler's vice president responsible for alliance programs, Mark Chernoby, is also leading Project D. Depending on the outcome of discussions between the two companies, Chrysler could still decide to build the car in-house, it could partner with Nissan, or it could partner with another company to build it.

"The things we're looking at are [manufacturing] economies of scale — which brings cost benefits to both sides — and that both partners have something to gain," Klegon said.

How soon will a decision be made? "We'll know in the first half of 2009," he said.

LINK: Chrysler, Nissan Talk Joint Car Manufacturing - KickingTires
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