Nissan backs off plan to have Magna Steyr build Infiniti compact car
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Nissan's Infiniti brand said it will build a new premium compact car in-house at a European plant instead of contracting out production to Magna Steyr.
Infiniti said the car is on schedule to launch in 2015 and the company will announce a production location and more product details closer to the launch date.
Infiniti began a feasibility study with Magna Steyr in May to determine a possible production site in Europe for the compact. Annual production of about 50,000 to 60,000 units a year of the car was planned at Magna Steyr's plant in Graz, Austria, according to sources.
"Infiniti ended the feasibility study this week and has decided to produce the vehicle in-house in a European production facility as part of the brand's overall expansion plans," the automaker said on Friday.
The compact will share the same underpinnings as the Mercedes A- and B-class models. Renault-Nissan and Mercedes parent Daimler announced a strategic cooperation between the two companies in 2010.
Infiniti believes the car, a rival to the Audi A3 and BMW 1 series, will find a receptive market among young buyers in Europe. Company executives say the model will combine driving performance and an emphasis on style to compete with German luxury brands.
Infiniti, which has sold about 4,000 cars in western Europe in total, believes volumes for the compact could be 10 times that amount.
Magna setback
"Although we would have liked to see the assembly of Infiniti's new compact vehicle realized at Magna Steyr, we are pleased that Magna remains an important supplier for Nissan Motor Co.," said Gunther Apfalter, president of Magna Steyr and Magna International Europe.
"Nissan's project team has affirmed their willingness to work with Magna Steyr if future contract assembly opportunities arise, and we look forward to supporting them as needed."
The setback for Magna comes after German carmaker BMW said it would likely not renew the contract for Magna Steyr to build the Mini Countryman SUV and Paceman SUV-coupe once their lifecycles have run out.
Most independent contract carmakers in Europe have either been rescued by fresh investors, sold off in parts or filed for insolvency because their customers already have more than enough spare factory space of their own.
Only premium carmakers have struggled with production bottlenecks as they expand their model range, moving downmarket into small car segments traditionally home to volume brands.
In July, Daimler awarded independent Finnish car manufacturer Valmet Automotive a contract to build more than 100,000 Mercedes-Benz A-Class compact cars from 2013-16.
More recently, improved logistical ties to its supplier base in Britain prompted BMW to give VDL NedCar a contract to build Mini cars earlier this month.
Reuters contributed to this report
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