Nissan Puts The Brakes On Chrysler Deal

Automaker halted preparations for a business alliance with Chrysler under which the two would build vehicles for each other, Japanese news agency reports.

NEW YORK (AP) -- Nissan Motor Co. has halted preparations for a business alliance with Chrysler LLC under which the two automakers would build vehicles for each other, the Japanese news agency Kyodo reported Thursday.

Under the planned deal unveiled last year, Nissan was to build small cars for Chrysler, and Chrysler was to build a pickup truck for the Japanese automaker under the Nissan name.

Kyodo, citing unnamed sources close to the deal, reported that Nissan is now reviewing the alliance, with terminating the tie-up an option.

A spokesman for Nissan's U.S. operations said he had not seen the report and could not immediately comment.

Chrysler Vice Chairman Jim Press said Thursday in Chicago that the alliance is still on, and said Chrysler just reviewed interiors for one of the projects.

Chrysler last year accepted $4 billion in government loans and is racing to develop a viability plan to show to the U.S. government by its Tuesday deadline. The Auburn Hills, Mich.-based automaker also recently announced an alliance with the Italian automaker Fiat SpA.

Under that tentative deal reached in January, Fiat would take a 35 percent stake in Chrysler in exchange for its small-car technology.

Thursday, Frank Klegon, Chrysler's product development chief, conceded the Nissan deal would duplicate some of Fiat's products, but he said Chrysler is still working with the Japanese automaker.

Klegon said no contract has been signed with Nissan.

Nissan, for its part, is facing troubles of its own. Earlier this week, the company said it plans to post a loss for the fiscal year, announced 20,000 job cuts and said it is seeking government assistance. The automaker confirmed it has applied to the U.S. Department of Energy for assistance through a $25 billion loan program designed to help carmakers develop more fuel-efficient cars.

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