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Slowdown signs - Nissan and Chrysler scrap vehicle supply deal

AFP reported that Japan's Nissan Motor and Chrysler of the United States have scrapped a plan to supply vehicles to each other because of the ongoing turmoil in the industry.

Nissan had announced last year it would provide to Chrysler a compact sedan for the South American market beginning this year and a small vehicle for global markets from 2010. Chrysler, which has since partnered with Italy’s Fiat as part of its bankruptcy plan, had been due to supply a pickup truck to Nissan from 2011.

But the two companies decided to end the project in light of significant changes in business conditions since the projects were announced. The move comes after Chrysler and Fiat sealed a deal in June to create a new auto giant after the Italian maker stepped in to salvage the bankrupt US firm.

Fiat will at first hold 20% of Chrysler Group, with its equity stake rising to 35% and eventually to a majority stake as long as certain targets are achieved and US government funds are repaid.

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